No Tax relief under GST for entities enjoying Tax Exemption

Goods and Services Tax (GST) is a unified tax regime implemented in India on July 1, 2017. GST has replaced multiple taxes such as excise duty, service tax, and value-added tax (VAT) with a single tax regime. GST has brought about many changes in the taxation system of India, and businesses across the country have been impacted by it. One major change that has come with GST is the tax exemption provided to entities that are enjoying tax exemption under the previous tax regime.

For entities that were enjoying tax exemption under the previous tax regime, GST has not provided any tax relief. This means that such entities have to pay GST on all their goods and services, and they are not entitled to any exemption or concession in GST.

Small and medium-sized enterprises (SMEs) and startups in India that were enjoying tax exemption under the previous tax regime have been particularly impacted by this change. These entities were previously exempt from paying VAT, excise duty, and service tax, but they now have to pay GST on all their goods and services. This has increased their tax liability and made it difficult for them to compete with larger companies that are not impacted by this change.

One of the reasons for not providing any tax relief to entities enjoying tax exemption under the previous tax regime is to ensure that the tax base of GST remains broad. If tax relief was provided to such entities, it would have resulted in a narrower tax base, and the revenue generated from GST would have been lower.

Another reason for not providing any tax relief to entities enjoying tax exemption under the previous tax regime is to ensure that the benefits of GST are spread equally across the country. If tax relief was provided to such entities, it would have resulted in a disproportionate benefit to certain states or regions of the country, and this would have been against the spirit of GST.

In conclusion, entities that were enjoying tax exemption under the previous tax regime are not entitled to any tax relief under GST. This has increased their tax liability and made it difficult for them to compete with larger companies. However, the government has taken this step to ensure that the tax base of GST remains broad and that the benefits of GST are spread equally across the country.