There is a prevailing concern amongst designers of Goods and Services Tax (GST) in India that the threshold for registration (and full exemption) for goods and services should be the same. I am writing to say in this treatise that it need not be so. In fact, it is not so in many important countries which are working with GST successfully for many years with different thresholds for registration,exemptions and other purposes.

Assuming that in India there will be a dual GST, I am discussing about the possibility of same or different threshold for both Central GST as well as the State GST. Both are yet to come. The State Value Aded Tax (VAT) has got only one threshold because it consists only of goods and there are no services. In case services are added to the State VAT by allowing some services to be levied by the state governments (after due amendment of the Constitution), the question of having the same threshold for goods and services will arise.

The Central GST will have to be a combination of the present Central Excise (goods tax), also known as Cenvat and the service tax. For Central Excise, the present threshold below which small scale firms do not have to register and are fully exempted is Rs 90 lakh. For service tax, it is Rs 10 lakh. It is not quite practicable to immediately make both of them the same because the difference between them is extremely huge. All that one can do is to make them equal gradually. Internationa l experience shows that the thresholds for goods and services are different in many important countries. (Table)

Apart from the different thresholds for goods and services as shown above, there are also different thresholds for distance-selling and intra-community acquisitions in all the countries. In the countries mentioned in the table, there are four differences. For example in France the thresholds are (a) 76,300, general threshold for annual turn over for goods, (b) 27,000 , general threshold for annual turn over for services (c) 1,00,000, threshold for distance selling and (d) 10,000 threshold for intra-community acquisitions. Moreover, the criteria of the general threshold vary from country to country.

In some countries income tax payment or expected turnover are also taken into consideration. In some countries, voluntary registration is also permitted. It is true that European Union (EU) is not one country, but the Sixth Directive for the EU has made many principles and procedures same for them. Threshold is an exception primarily because of the difference in the level of economic development amongst them. England is singularly different from others in that the threshold is 82,800 which is way above other countries.

The conclusion is that in the designing of GST in India both at the Central and State levels, the immediate concern need not be to make the same thresholds for goods and services. They can remain different, but the present gap in India is far too much. It is always desirable to bring them closer to each other in due course. After all, the vast majority of countries in the world have one combined threshold for goods and services which is most convenient and is simpler to implement.