Six states so far have decided to double the threshold to 40 lakh after the GST Council last week agreed to the move aimed at reducing the compliance burden on small businesses. Kerala is the only state to retain the GST threshold at an annual turnover of Rs 20 lakh for businesses in the state. Congress-ruled Chhattisgarh, which had initially argued against raising the limit, J&K and Assam, which had the option to stick to a lower threshold, given that they are hill states are interesting additions to the list.
Centre has decided to extend the deadline by a week while other states are yet to finalise their threshold. The new GST limit for businesses provides flexibility to states in deciding the cap. 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 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
