The Goods and Services Tax Council should consider raising the GST exemption threshold to Rs 1.5 crore annual turnover and also do away with the requirement of state-wise registration, which would help ease compliance, economic think tank GTRI said on Friday.
The GST network has over 1.4 crore registered taxpayers, making it the largest global platform for indirect taxes.
“The GST Council now needs to consolidate gains by making compliance easy,” the Global Trade Research Initiative (GTRI) said, while recommending seven reforms for next phase of transformational growth.
The think tank suggested increasing the GST exemption limit to Rs 1.5 crore, which it feels will be a game changer for India's MSME sector and set them on the path to job creation and growth.
Currently, registration for GST is optional for firms with an annual turnover of less than Rs 40 lakh for goods and Rs 20 lakh for services.
“Firms with less than Rs 1.5 crore annual turnover account for 84 per cent of total registrations but contribute less than seven per cent of the tax collected. The new limit would reduce the load on the GST system, which will deal with less than 23 lakh taxpayers in contrast to 1.4 crore now,” GTRI said.
It also suggested doing away with state-wise registrations. Today, if a firm does business in 10 states, it must obtain 10 GSTINs and maintain a separate account for each. The GST rules set a restriction on the use of available credit.
“This restriction results in capital blockage. Essentially, GST has converted one firm into ten independent entities. This defeats the one nation, one tax concept,” it added.
Today, in the absence of tribunals, if a firm is not happy with the decision of GST commissioners/appellate authorities, it has to approach High Courts, which are already overburdened. Any delay means locking up of business capital, it added.
The think tank also suggested operationalising invoice matching, unifying state portals with GSTN and using a central unified server for back-end processing for all states to ensure uniformity.
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