Does threshold exemption really exist ?

                             DOES  THRESHOLD EXEMPTION REALLY EXIST UNDER GST  ACT ?

     Answer is big “NO”. Threshold exemption of turnover of ₹ 20 lakhs is only in the name. Threshold exemption of ₹ 20 lakhs has been denied by Govt. by   attaching following strings  to  the businessmen :-

As per Section 24 of the CGST/SGST Act, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:

i) persons making any inter-State taxable supply;

ii) casual taxable persons;

iii) persons who are required to pay tax under reverse charge;

iv) electronic commerce operators required to pay tax under sub-section (5) of section 9;

v) non-resident taxable persons;

vi) persons who are required to deduct tax under section 51;

vii) persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;

viii) Input service distributor (whether or not separately registered under the Act)

ix) persons who are required to collect tax under section 52;

x) every electronic commerce operator

xi) every person supplying online information and data base retrieval services from a place outside India to a person in India, other than a registered person; and,

             xii) such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.

           xiii)   any person who  has  turnover below  Rs.20 lakhs and obtains GST registration voluntarily as per FAQ released by Board on 28.6.2017. Vendors (Job workers)  are forced by the big companies to get registration and thus they would forfeit their threshold exemption which would result in payment of GST from Re one.

           xiv) any person who wants to opt for Composition Scheme has to get himself registered and has to pay GST from Re. one and thus forfeiting his threshold exemption.

         A businessman with turnover of ₹ 20 lakhs is a small business man whether he is a manufacturer or dealer or service provider. Virtually, Govt. has snatched  threshold exemption from small persons by imposing aforesaid conditions on them. It tantamounts to snatching fundamental right to live. These are the noiseless cries of small business which must be listened to by the Govt. In case the Govt. intends to woo the hearts of small businessmen, nay,  middle class families, Govt. must remove all the caps imposed upon them and enable them to avail threshold exemption like in  pre-GST period. A person with a turnover of 20  lakhs has to pay rent of premises, maintenance of premises, Income Tax and now GST and life is not restricted to the basic needs of Roti, Kapda Aur Makan. There are necessities like education and health expenses, savings for future etc. How far such meager threshold exemption with too much restrictions is justified ?  The very purpose of threshold exemption is defeated by  the aforesaid conditions imposed upon for availment threshold exemption. It has actually been denied. Such small businessmen  feels suffocated and hence aggrieved with such non-existent threshold exemption. Small Scale Industries and Small Service Providers have not been given relief by  way of  enhancing threshold exemption limit  for 10 years and 9 years respectively. It is evident from the following data:

Now after a decade manufacturers, wholesale dealers, Retailers and Service Providers have been brought at par by way of allowing  threshold exemption limit of turnover of  just ₹ 20 lakhs each. Here it would be pertinent to analyse why any  Govt. did not increase threshold exemption for such a long period which was overdue. Rate of inflation may be the possible factor for non-increase of threshold exemption for a decade. So it is worthwhile to  have a look into the history of rates of inflation  existed  during last 15 years which are given in the table given below:

    From a perusal of above, it can be deduced that Govt. has brought down threshold exemption to ₹ 20 lakhs from ₹ 1.50 crores on the basis of rate of inflation remained in 2016 and 2017. Though the rate of inflation remained at peak during  the years 2008, 2009, 2010 and 2012, yet threshold exemption limit was not increased at all. Thus it remained stagnant at ₹ 1.50 crores. The rate of inflation does not reflect true picture inasmuch as in real life prices of all items have increased five or six times. Thus SSI units have suffered a lot due to stagnant threshold limit for a decade. As per well-known Statisticians, statistical data does not indicate 100% accuracy. So the rate of inflation cannot be relied upon for all economic policies of Govt. Govt. cannot deny the sky rocketing prices of all commodities. The prices of gold, an international currency gives the true picture of sky rocketing prices of all the commodities as prices are influenced by international marketing forces.  Govt. has done gross injustice to all manufactures, dealers and service providers by fixing threshold exemption of just ₹ 20 lakhs each. Ultimately, repercussion will be on  poor and middle class families.

        Modvat facility was introduced in April, 1986 and thereafter it was called Cenvat Credit and Input Tax Credit. Even a period of three decades has lapsed, there is  a large number of dealers and service providers who do not  even know what is this credit facility and how they can get set-off. So all small manufacturers, dealers and  service providers will be forced to hire C.A.’s services and they cannot afford the high fee of CA’s. It is happening because of conditions imposed upon for denying them their right of threshold exemption.

              In case Govt. wants to woo the hearts of poor ( which constitute 23% of population)and middle class (which constitutes 50% of population in India)  families in the interest of nation, Govt. should lift all the pre-requisites imposed for availing small scale exemption  irrespective of the reasons foreseen behind this and enhance threshold exemption to ₹ 50 lakhs and Rs. One Crore for Composition Scheme respectively. SSI units, Small businessmen (dealers and Service Providers) deserve this relief.     

Keeping in view the record-breaking rising prices as well as  non-enhancement threshold exemption limit for a decade, now threshold exemption is suggested to be revised as under:-

(i)  For Manufacturers (SSI units) :  Rs.two crores

(ii) For dealers      :                        ₹ 50 lakhs

(iii) For Service Providers :             ₹ 30 lakhs

               Such increase is not unjustified by any amount of logic.