Karnataka CM Shivakumar hints at "good news" on pending central grants after GST Council meet

New Delhi: Karnataka Chief Minister DK Shivakumar hinted at a possible development on the state's long-pending central grants, saying Union Finance Minister Nirmala Sitharaman shared "some good news" with him after he raised the issue during the GST Council meeting.

"I discussed our state's long-pending grants with the Finance Minister, and she has shared some good news. I won't talk about it right now; I will speak on it later," Shivakumar said.

The Karnataka CM made these remarks while addressing the media at Karnataka Bhavan following the GST Council meeting.


Shivakumar also opposed the proposal to register criminal cases and arrest people for non-payment of GST, arguing that officials should instead focus on recovering the dues.

"The GST Council meeting went exceptionally well. Everyone agreed with Karnataka's points. The proposal to register criminal cases and arrest those who do not pay GST came up for discussion. I argued that rules and regulations similar to the Income Tax Department should be followed, and that it is inappropriate for officials to unnecessarily arrest business owners. We should focus on collecting whatever amount is due from them; arresting them is not right. Except for one state, all other states agreed with this position," he said.

Shivakumar said Karnataka's position at the meeting was that the focus should remain on recovering the amount due rather than resorting to arrests of business owners.

His remarks come after the GST Council meeting, where he said Karnataka's points received agreement from the participating states.

However, he did not disclose details of the "good news" shared by the Union Finance Minister regarding Karnataka's pending grants, saying he would speak about it at a later stage.

The Chief Minister also highlighted that key concerns raised by the state were positively received by the federal body.

Speaking to reporters here, Shivakumar emphasised the need to protect business owners from aggressive enforcement actions and administrative overreach. He argued against harsh punitive measures for non-payment of taxes, advocating for an approach aligned with the Income Tax Act instead. He stated that enforcement officers should focus on revenue collection rather than detaining entrepreneurs.

"The GST meeting went very well. Karnataka had two important points, and they have accepted both. One point was about criminal cases and arresting people for not paying GST. In Income Tax, there is a provision for this; we should follow that. It is not right for officers to unnecessarily arrest businessmen. Recover whatever money is due, but arrest is not right. ED-type action should be removed," he said.

In a major shift from rate revisions, the 57th GST Council meeting concluded at Bharat Mandapam here, approving a sweeping package of enforcement and procedural reforms.

The meeting, chaired by Union Finance Minister Nirmala Sitharaman, decided not to tinker with the existing GST rate slabs. The Council said rate-related matters will now be reviewed only once a year at a dedicated meeting to ensure greater policy predictability for industry.

All structural overhauls approved will come into effect from April 1, 2027. In a significant relief for taxpayers, the Council has completely scrapped the power of GST officers to arrest individuals. It has also raised the monetary threshold for launching prosecution fivefold--from Rs 1 crore to Rs 5 crore.

Further easing the penal provisions, the general penalty for offences where no specific penalty is prescribed has been slashed from Rs 25,000 to Rs 10,000, and minimum punishments have been removed. Courts will now decide on imprisonment or specific fines.

To ease working capital stress, the Council approved fast-tracked, automated refunds, under which businesses will receive 90 per cent of claimed refunds within 13 days. The timeline for officers to acknowledge refund claims has been shortened to 10 days from 15 days.