New Delhi: The Centre and states should extend the approach adopted by the Goods and Services Tax Council in decriminalising certain GST offences to areas such as land, labour, construction and local approvals to reduce compliance costs and accelerate investments, industry body CII said.
The Confederation of Indian Industry (CII) said the GST Council’s decisions at its October 8 meeting marked a shift towards trust-based governance and demonstrated how the Centre and states could overcome differences to deliver institutional reforms through consultation and consensus.
The next phase of reforms, it said, should focus on simplifying land-use regulations, speeding up construction permissions, streamlining labour administration, facilitating utility connections and reducing the multiplicity of local regulatory approvals – areas that constrain investment, manufacturing and enterprise growth.
Businesses often face overlapping requirements, multiple authorities and inconsistent procedures across states, adding to project costs and implementation timelines, it noted. “The GST Council has demonstrated that difficult institutional reforms can be achieved when the Centre and states agree on common objectives and work together to deliver them,” said Chandrajit Banerjee, director general of CII. “We need similar coordination and reform commitment across land, labour, construction, utilities and local permissions to improve the ease, cost and speed of doing business.”
The GST reforms included raising the prosecution threshold fivefold, from ₹1 crore to ₹5 crore, narrowing specified offences under Section 132 of the CGST Act, rationalising imprisonment provisions and removing arrest powers through the proposed omission of Section 69. The changes require legislative amendments for implementation.
CII said the measures would reduce uncertainty, legal costs and reputational risks for businesses, particularly MSMEs and first-generation entrepreneurs, while preserving criminal action against deliberate fraud and evasion. The clarification and circulars on registration, notices and adjudication, following the decision, offer greater clarity in tax administration and evidence-based treatment of fraud allegations, it said.
These, along with measures on refunds, input tax credit and compliance simplification, could improve working capital efficiency and reduce avoidable disputes. CII said the GST Council’s experience offered a framework for the next generation of reforms, where the challenge would increasingly lie in aligning policies and administrative processes across different tiers of government.
It also called on industry to match the shift towards trust-based regulation with stronger internal controls, documentation and voluntary compliance, particularly among MSMEs.
