Government looks to tap segment of kirana stores to expand GST base: Report

A top tax official said on Thursday that the Indian government is preparing to expand the scope of its goods and services tax (GST) in order to include more small businesses in the tax net.

The Narendra Modi administration has been attempting to increase tax collections by including more of these activities because India has a sizable informal sector.

Businesses having an annual revenue of Rs. 40 Lakhs or more are required to register under the GST, which replaced a variety of state and federal levies when it was introduced in 2017.

Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs, said in an interview with Reuters that “we may adopt a sectoral approach in some industries where we feel the taxpayer base is very low compared to the size of the market.”

According to Johri, the federal government is also collaborating with state governments on a plan to broaden the base of indirect tax payers.

As of January 2023, there were 14 million firms that fell under the GST net, up from around 6 million in 2017, according to Johri, who saw scope for further expanding the taxpayer base under the GST system.

He added that one is the business-to-consumer (B2C) market and that the government would employ technology to target potential taxpayers without being overly intrusive.

In order to strengthen the tax base, the government would access both private databases and data held by various government entities, according to Johri.

According to Johri, “These databases may contain information on income tax payers, property tax, business directories, and electricity distribution businesses, among other things.”