Arun Jaitley said small companies would have option to opt out of GST tax net.New Delhi:The government announced a change in Goods and Services Tax (GST) rules on Thursday that would exempt an additional two million small businesses, in a move that could help garner support ahead of a general election that must be called by May."India will exempt small businesses with annual sales of up to Rs 40 lakh ($56,701) from paying taxes under GST," Finance Minister Arun Jaitley told reporters.A finance ministry official said decision could benefit about two million firms.
Currently, firms with an annual turnover of up to Rs 20 lakh are exempted from registration for GST.
The change will come into effect in April.Mr Jaitley made announcement after a meeting of GST Council, comprising central and state finance ministers.The decision comes after Prime Minister Narendra Modi said government was planning to simplify GST, first introduced in July 2017 with aim of replacing more than a dozen central and state levies.The introduction of a Goods and Services Tax improved economic efficiency and is helping to unify country's sprawling domestic market, but small businesses say complexities of new system have driven many of them out of business and forced hundreds of thousands out of a job.