The 56th meeting of the GST Council is expected to deliberate on a major relief measure for small businesses: increasing the annual turnover threshold for mandatory GST registration. This move comes in response to widespread protests and grievances from small traders who recently received GST-related notices across several states.
Currently, businesses are required to register under GST if their annual turnover exceeds ₹20 lakh for services and ₹40 lakh for goods. However, sources suggest that the Council may propose a significant hike—raising the threshold to ₹50 lakh for services and ₹1 crore for goods.
States like Uttar Pradesh and Karnataka have taken the lead in discussions with the Centre, highlighting the hardships faced by micro and small enterprises that were pulled into the tax net due to low turnover limits. Officials familiar with the matter said the objective is to shield genuine small vendors from unnecessary compliance burdens.
“The GST regime was meant to simplify taxation for businesses, not to strangle small players in red tape,” said a senior government official. “With inflation and business costs rising since 2017, the current turnover thresholds are outdated.”
It is worth noting that businesses with annual turnover up to ₹1.5 crore are already eligible to opt for the composition scheme, under which they pay a flat 1% tax and enjoy simplified compliance. However, registration under this scheme is still mandatory for those crossing the lower threshold, which has triggered the recent wave of notices and confusion.
The proposed revision in limits, if accepted, would represent the first such major change since GST’s rollout in 2017. It could potentially exclude lakhs of small vendors from the GST ambit, saving them from the compliance maze and regulatory scrutiny.
The 56th GST Council meeting is expected to be held in early August, and a final decision will be announced thereafter.
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