Small trading having an annual turnover up to Rs 25 lakh will be exempted from goods and services tax and the Centre and states are likely to agree to this limit, Revenue Secretary Hasmukh Adhia said on Thursday.

"There will be an exemption limit for small traders and the limit is likely to be fixed at Rs 25 lakh. The states and the Centre are now involved in an intense discussion on this. More or less, we have reached an understanding that the limit will be up to Rs 25 lakh," Adhia said in a post on the finance ministry's YouTube channel.


States have been demanding that GST should not be imposed on businesses with an annual turnover of less than Rs 10 lakh. The same limit should be Rs 5 lakh for special category and Northeastern states.

Currently, the threshold for value-added tax is Rs 10 lakh in most states.

Adhia said GST will ensure ease of doing business for traders, and compliance will be better as tax evasion would be difficult.

He said the incidence of tax on most items would come down on implementation of GST, from the current 30-32 per cent in some commodities.