The twenty-third meeting of the Goods and Services Tax (GST) Council in Guwahati on Friday is set to tighten the noose on players who, authorities believe, have started splitting their business operations into smaller entities to avoid higher tax liabilities.
The Council is also set to cut tax rates on a large number of product lines.
The Council is expected to further liberalise the Composition Scheme for small businesses and traders to pay a flat and low tax on their turnover.
The annual turnover eligibility threshold is likely to be raised to ₹1.5 crore from the ₹1 crore limit, imposed at the Council's October meeting.
However, the government is concerned about the emergence of a parallel economy despite the restrictions on the Composition Scheme, whose original threshold limit was just ₹75 lakh a year.
Small States may have legitimate concerns, but the restriction on inter-State supplies by businesses under the Composition Scheme could also fuel the prospects for more informal trade outside the tax net.
The GoM has not been able to arrive at a consensus on the question of whether supplies from small firms that are part of the Composition Scheme should translate into input tax credits for larger firms who buy from them.