Over 2 lakh assessees have opted out of the Goods and Services Tax (GST) registration as their turnover is below the prescribed threshold. This will benefit both the taxpayers and the GST Network, the IT back-bone of the new indirect tax regime.
These are assessees who migrated from the VAT (Value-Added Tax) regime to the GST regime. A senior Finance Ministry official told BusinessLine: “Turnover of these assessees are below the threshold of ₹20 lakh (₹10 lakh in some States), which means they are not required to continue under the new regime, though they think otherwise.” During the pre-GST regime, States had different slabs for registration under VAT/ST, which was as low as ₹1 lakh and could go up to ₹10 lakh: the thresholds for Service Tax and Central Excise were ₹10 lakh and ₹1.5 crore respectively.
With the universal threshold, it was obvious that some old assessees will opt out. This meant, if the turnover of the entity is less than the GST threshold and the assessees were not willing to go for voluntary registration they had the option to get the provisional registration cancelled and move out of the GST net.
However, many assessees failed to complete the process, and so they continued to be a part of the GST-assessee base.
Originally, 88.61 lakh applied for migration and got the provisional certificate. Once all the formalities were completed, the provisional certificate was confirmed. The official said over 24.5 lakh did not complete the formalities and out of these 2.34 have opted for de-registration.
This meant there are over 64 lakh migrated tax payers now. At present, GST has over 1.16 crore assessees which is a combination of migrated and new assessees.
Another Finance Ministry official felt that with de-registration, the tax base will be effective. This kind of a tax base will serve two purposes — it will lighten the burden on the GSTN and will give a real picture of the indirect tax regime.
Tanushree Roy, Director – GST at Nangia Advisors LLP, said with a high number of assessees opting out of the GST registration it would enable them to focus more on business operations simultaneously reducing the costs and burden of undertaking the GST compliances.
This would also help the GSTN in efficient management of the portal and reduction in cost for maintenance of servers.
R Muralidharan, Senior Director at Deloitte India, said de-registration of over 2 lakh assessees will marginally reduce the traffic on GSTN as this is merely 3 per cent of the total return filers. Most of these assesses are likely to be below the threshold limit for registration.