Introduction

The Goods and Services Tax (GST) system was introduced in India as a uniform indirect tax system aimed at simplifying the tax structure and reducing the tax burden on the common man. However, the GST system has faced many challenges, and one such challenge is the partiality in GST limit in the Northeastern region of India.

The Goods and Services Tax (GST) is a comprehensive indirect tax system introduced in India in July 2017 and later updated in 2019. It subsumed multiple taxes like excise, service tax, VAT, etc. into one single tax. GST is levied on the supply of goods and services, and it is collected by the central and state governments. However, the implementation of GST has faced several challenges, including partiality in the GST limit in Northeast India. In this article, we will explore the causes and effects of this partiality and what it means for the people of Northeast India.

Understanding the GST Limit Partiality in Northeast India

The GST limit in the Northeastern region of India is lower compared to other regions in India. The GST limit for the Northeastern region is Rs. 20 lakhs, whereas the GST limit for other regions is Rs. 40 lakhs. This difference in GST limit creates a bias towards businesses in the Northeastern region, making it difficult for them to grow and compete with businesses in other regions. This also means that even a pan shop in Northeast India with an annual turnover of more than 20 lakhs is liable to pay GST tax. This is a big blow to the local shopkeepers and MSMEs.

The GST limit for small businesses in India is INR 40 lakhs, and businesses with an annual turnover below this limit are eligible for the composition scheme. Under this scheme, they are required to pay a flat tax rate, which is much lower than the standard GST rate. However, in the case of Northeast India, the GST limit has been kept at INR 20 lakhs as per the latest update in 2019, which is half the national limit. This has caused widespread outrage and protests among the small business owners of the region, who feel that they are being discriminated against.

Why is GST Limit lower in Northeast India?

There are several reasons why the GST limit in Northeast India is lower than the rest of the country. Firstly, the region is considered to be a “special category state,” which means that it receives special financial assistance from the central government. This assistance is given to support the development of the region and its infrastructure.

Another reason for the partiality is the low economic growth of the region compared to other parts of the country. The central government has set a lower GST limit in an attempt to encourage more small businesses to come up in the region and boost its economic growth.

The Effects of GST Limit Partiality in Northeast India

The partiality in the GST limit has had several negative effects on the small business owners of the region. Firstly, it has made it difficult for them to compete with businesses from other parts of the country, as they have to pay a higher rate of tax. This has made it difficult for them to expand their businesses and increase their profits.

Another effect of the partiality is that it has led to a decrease in the number of businesses that are willing to set up in the region. The lower GST limit has made it less attractive for businesses to invest in the region, which has led to a slowdown in its economic growth.

Impact on Small and Medium Enterprises (SMEs)

Small and Medium Enterprises (SMEs) are the backbone of the Indian economy, and the Northeastern region is no exception. However, the lower GST limit in the Northeastern region has a significant impact on the growth of SMEs in the region. The lower GST limit restricts the growth potential of SMEs and makes it difficult for them to expand their operations and compete with larger businesses. Also, due to infrastructural and logistic challenges, the Northeastern regions are always a victim of the high price commodities and uncontrolled inflations.

Inadequate Infrastructure

The Northeastern region of India is known for its inadequate infrastructure, which is a major hindrance to the growth of businesses in the region. The poor infrastructure in the region makes it difficult for businesses to transport goods and services to other regions, further impacting their growth and competitiveness.

Need for Equal GST Limit for All Regions

It is imperative that the GST limit for the Northeastern region is equal to that of other regions in India. This will provide a level playing field for businesses in the Northeastern region and encourage their growth and competitiveness. The equal GST limit will also help in reducing the tax burden on businesses in the Northeastern region, making it easier for them to expand their operations and reach new markets. In fact, the way the GST is implemented should be the other way round wherein the Northeastern states are given a higher GST limit to compensate with the challenges they are facing.

Conclusion

In conclusion, the partiality in the GST limit in the Northeastern region of India is a major hindrance to the growth of businesses in the region. The lower GST limit restricts the growth potential of businesses in the region and makes it difficult for them to compete with businesses in other regions. It is imperative that the GST limit for the Northeastern region is equal to that of other regions in India to provide a level playing field for businesses in the region and encourage their growth and competitiveness.

Frequently Asked Questions

Q: Why is the GST limit lower in Northeast India?

A: The GST limit in Northeast India is lower because the region is considered to be a “special category state” and it receives special financial assistance from the central government. The lower limit is also an attempt to encourage more small businesses to come up in the region and boost its economic growth.

Q: How has the partiality in the GST limit affected small business owners in Northeast India?

A: The partiality in the GST limit has made it difficult for small business owners in the region to compete with businesses from other parts of the country and has led to a decrease in the number of businesses that are willing to set up in the region.

Q: What can be done to address the GST limit partiality in Northeast India?

A: The central government can increase the GST limit in Northeast India to the national limit of INR 40 lakhs