NEW DELHI: Kerala is so far the only state to retain the GST threshold at an annual turnover of Rs 20 lakh for businesses in the state, even as half-adozen states agreed to double the registration and tax limit for manufacturers to Rs 40 lakh.
So far, six states have decided to double the threshold after the GST Council last week agreed to the move aimed at reducing the compliance burden on small businesses, sources told TOI. An interesting addition to the list is Congress-ruled Chhattisgarh, which had initially argued against raising the limit on the grounds that revenues would be impacted.
The other interesting inclusions are J&K and Assam, which had the option to stick to a lower threshold, given that they are hill states. Earlier, when these states were allowed to levy tax only on businesses with turnover of up to Rs 10 lakh, the two had opted for a higher limit.
The other states are yet to finalise their threshold and the Centre has decided to extend the deadline by a week. The new GST limit for businesses provides flexibility to states in deciding the cap, which finance minister Arun Jaitley had described as a one-time exception. The move to raise the limit could potentially result in around 20 lakh out of the 1.2 crore GST-registered entities opting out of the indirect tax net.
But, the government believes that all these businesses may not opt out as they are part of a manufacturing chain and large companies, which buy from them, may want them in the net so that they can claim credit for taxes paid on inputs in the manufacturing and sales process.
Officials, however, said that despite entities opting out of the regime, they will be able to track a large part of the business as a wholesaler may report sales to a kirana store that might opt out. In any case, they said sales reported by a large number of these entities were low and compliance posed a major challenge.
“Even if sales are Rs 30 lakh, their margin will be around Rs 3 lakh and, after deducting payments, they may not even be an income tax assessee,” an official added.
Source : https://timesofindia.indiatimes.com/business/india-business/several-states-opt-to-double-gst-threshold/articleshow/67596382.cms