Small traders, special tax regime for

Many countries offer simplified tax frameworks for very small traders—such as local shopkeepers, independent workers, and craftspeople—to ease their compliance burden. These regimes typically apply to VAT or GST systems and are intended for businesses with modest turnover and limited administrative capacity. Such frameworks may provide a variety of concessions, including exemption from VAT/GST registration up to a specified revenue threshold, lower tax rates, streamlined filing procedures, reduced documentation, and composition-style schemes in which tax is calculated as a small percentage of turnover. These provisions help small traders remain compliant without significant administrative effort.

Example: India – GST Composition Scheme Traders with turnover up to ₹1.5 crore may opt into a composition plan under which they pay tax at a modest fixed rate—often around 1% for traders—file quarterly returns instead of monthly ones, and maintain only basic records. They also do not charge GST on their sales. This framework especially benefits small retailers and manufacturers with limited resources.