PROS & CONS
1)
State government may lose Rs 500 cr annually because it has agreed to increase the threshold limit for exemption from GST to Rs 40 lakh yearly
2)
For businesses it is a good move, but Rs 500 cr loss is huge for a small state like Goa, especially when mining is shut down and tourism has shown de-growth
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PANAJI: The State exchequer is likely to lose Rs 500 crore annually with the State Government agreeing to increase the threshold limit for exemption of Goods-and-Services-Tax (GST) from Rs 20 lakh to Rs 40 lakh on yearly turnover.
Recently, Union Finance Minister, Arun Jaitley, had given an option to all the states to increase the GST exemption limit from Rs 20 lakh to Rs 40 lakh for businesses. This means that if the State Government wants, businesses with less than Rs 40 lakh annual turnover will neither have to register for GST nor have to pay the tax.
Even though it is good for businesses because they will save on tax, but Rs 500 crore annual loss in tax revenue is huge for a small state like Goa, especially when mining is shut down and tourism has shown de-growth.
Commissioner of Commercial Taxes, Dipak Bandekar, said, “The government has agreed to increase the threshold limit for GST exemption to Rs 40 lakh. Once the Central Government makes an amendment to this effect, the State Government too will make an amendment.”
Bandekar continued, “Goa government may end up losing Rs 500 crore annually in tax revenue due to this move. There are around 900 dealers with an annual turnover between Rs 20 lakhs and Rs 40 lakhs.
When GST exemption limit is increased to Rs 40 lakh, these dealers will be exempt from paying the
tax.”
“However, Rs 500 crore annually is the upper limit of the probable loss. This is because some dealers with an annual turnover of Rs 20 lakh to Rs 40 lakh may choose to remain registered,” Bandekar later added.
There is a possibility of the State Government introducing a “reverse charge” as well. In simple words it means: If you are not paying GST for being an unregistered business with less than Rs 40 lakhs turnover, your buyer has to pay GST on your behalf. At times, buyers may not buy from an unregistered business and therefore even businesses with under Rs 40 lakhs turnover may choose to remain unregistered.
Overall in Goa, there are 37,496 dealers (businesses registered with GST). Of this, around 15,000 have less than Rs 20 lakh annual turnover and around 900 dealers have between Rs 20 lakhs and Rs 40 lakh turnover. This means around 21,600 dealers have annual turnover of more than Rs 40 lakh.
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