How can Indian Govt. (Including states) encourage local businesses to pay tax?

Background: I was talking to a local small mutton shop in our colony. He sells both Chicken and Mutton and asks everyone to pay for Chicken using one QR code and Mutton to another one.

I just asked him why do you do that and he mentioned because of tax. They get 2-3Lakhs on Sundays and they fear that they need to pay tax.

Based on what he mentioned, he's doing gross revenues of 1cr per annum and assuming 20% net margin, he has at least 20Lakhs profit (based on 2lakhs per Sunday, completely ignoring the rest of the week's income too to keep it very minimal).

If we consider he makes 1 lakh for rest of the 6 days and 2 lakhs for Sunday, that's 3 lakhs per week, which is 1.5cr per annum and 30Lakhs profit.

He confirmed that he doesn't know how much tax is applicable for small businesses and even I don't know.

How can Govt. encourage businesses like these to contribute towards nation's development? What is the tax applicable to them? Is it outrageous amount of tax like how salaried individuals like me pay (35% including surcharge)?