Experts feel that the recent changes declared in the 32nd GST Council meet would complicate tax structure but spell convenience for small and mid-sized enterprises (SMEs). During its meet, the Council raised the minimum threshold limit for GST registration from Rs. 10 lakh to Rs. 20 lakh for hilly and north eastern states, while for others it was raised to Rs. 40 lakh from Rs. 20 lakh. With states being given the liberty to opt for or against increasing this threshold limit, experts perceive this as one of the disadvantages of GST.
GST in India was implemented to bring about uniformity in the tax structure and ease compliance. However, different threshold limits for different states overrules this concept. Also, since the choice is applicable only for the supply of goods and not services, taxation process for service could lead to complications in the long run. There’s a fear that these changes may re-establish the earlier tax structure.
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The measure though spell relief for SMEs. This is because if their respective states decide to increase the minimum threshold limit, businesses with annual sales below it will not have to register for GST and hence need not pay any taxes. Also, with the threshold of the composition scheme being raised from Rs. 1 crore to Rs. 1.5 crore, the same will bring more businesses under its belt. Under the composition scheme, entities get a concessional GST rate of 1% and need to pay taxes quarterly, unlike regular taxpayers who pay them monthly. Here are some top advantages and disadvantages of GST for Startups.