The Finance ministry’s move to exempt businesses with annual turnover up to Rs 40 lakhs from the earlier Rs 20 lakhs limit from paying the Goods and Service Tax (GST) is a huge step in providing relief to lakhs of smaller businesses in the country especially during the challenging COVID times, stated *Dr. Niranjan Hiranandani, President, ASSOCHAM.*
According to Dr Hiranandani, there are a sizable percentage of businesses in India which have a turnover of less than Rs 40 lakhs, exempting them from the tax bracket will help in reviving their business.
“Most of the smaller businesses are facing severe liquidity issues and are struggling to conduct their business after the lockdown and a loss of all business activities. The central government’s move to exempt this sizable chunk is a positive move and a step in the right direction to help out these smaller businesses. This is welcomed by the industry,” he said.
The government also introduced the Composition Scheme, whereby those businesses with a turnover of Rs 1.5 crore can pay only 1 percent tax.
“We also welcome the government’s move to provide the much needed respite to several other sectors including the construction by placing it in the 5 percent tax bracket. The step to reduce the GST to just 1 percent for affordable housing will give a big boost to this sector and would encourage more developers in the tier II and tier III to get into affordable housing,” he said.
Dr. Hiranadani also explained that out of the 230 items which were there in the 28 percent tax bracket earlier, the government has moved almost 200 items in the lower tax bracket. “Even the remaining items belong to the luxury category. A lower tax regime will give a boost to several of these industries and shows the commitment of the government to revive the markets,” he added.