Reduced Taxpayer Count Under GST Compared to Previous Indirect Tax Regimes
The introduction of GST in India will lead to a smaller base of registered taxpayers compared to the combined VAT and Service Tax systems. This is primarily due to a higher registration threshold of INR 20 lakhs, exempting many smaller businesses. Despite this reduction, tax revenue is unlikely to decrease, as most revenue originates from larger taxpayers with annual turnovers exceeding INR 1.5 crores.
Reduced Taxpayer Count Under GST Compared to Previous Indirect Tax Regimes
The Goods and Services Tax (GST) regime is set to replace all existing indirect taxes in India. However, the number of businesses required to register under GST will be lower than the combined total under the previous Value Added Tax (VAT) and Service Tax systems. This reduction is primarily due to the increased registration threshold of INR 20 lakhs, which means approximately two-thirds of the taxpayers previously registered under VAT and Service Tax will no longer be required to register under GST.
Despite this smaller assessee base, the nation is not expected to experience a decline in tax revenue. This is because the majority of tax revenue is generated by taxpayers whose annual turnover exceeds INR 1.5 crores. This trend was also highlighted in a report by the Financial Express.