During the ongoing Budget Session of Parliament, the issue of Goods and Services Tax (GST) exemption thresholds has emerged as a focal point of discussion, particularly about its impact on small and micro enterprises, including sole proprietorships. Lawmakers and industry representatives have voiced concerns over the current limits, citing the growing cost burdens on small traders and service providers. The debate is centered around whether the existing exemption thresholds—₹40 lakh annual turnover for goods and ₹20 lakh for services—remain appropriate in the current economic landscape or require upward revision to match inflation and rising operational costs.

Several Members of Parliament and state representatives have recommended a revision of these thresholds to ₹50 lakh for goods and ₹30 lakh for services to provide additional breathing room for small businesses. Proponents argue that raising the limit would help reduce compliance costs, encourage informal enterprises to enter the formal economy voluntarily, and improve the ease of doing business for first-time entrepreneurs. On the other hand, finance ministry officials have expressed caution, highlighting the potential revenue implications of raising thresholds too quickly. They emphasized the need to balance relief measures with the integrity of the tax base and overall fiscal discipline.

The Goods and Services Tax Council is expected to conduct a detailed review before the next council meeting, taking into account input from state governments, trade bodies, and tax professionals. Any changes to the exemption limits would be made after evaluating their long-term impact on both compliance and revenue generation. Meanwhile, the government has reassured small business owners that policy changes, if made, will be gradual and supported with digital infrastructure improvements and simplified compliance processes. The outcome of these discussions is likely to shape the next phase of India’s indirect tax reforms and determine how effectively small enterprises are integrated into the broader tax framework.