Firm with Rs 40 lakh in annual turnover stay out of GST net

Firm with Rs 40 lakh in annual turnover stay out of GST net

www.mangaloretoday.com

New Delhi, Jan 11, 2019 : The GST Council in its 32nd meeting on Thursday  the last before the Budget  took a slew of decisions aimed at reducing the tax and compliance burden on small and medium enterprises, including increasing the threshold limit below which companies are exempt from GST, extending the Composition Scheme to small service providers, and allowing small companies to file annual returns.

The Council also raised the annual turnover limit under which companies would be exempt from GST to ₹40 lakh for most States and ₹20 lakh for the North Eastern and hill states, from the earlier limit of ₹20 lakh and ₹10 lakh, respectively.

“A very large part of GST revenue comes from the formal sector and large companies,” Finance Minister Arun Jaitley said at a press conference. “The decisions taken today by the GST Council have been done to help the small and medium companies. The revenue impact due to these will be minimal.”

“Increasing the threshold limit [in general] from ₹20 lakh to ₹40 lakh is a welcome relaxation from the GST Council and should benefit a large number of taxpayers,” Pratik Jain, Partner and Leader Indirect Tax, PwC India, said. “Also, increasing the threshold to ₹40 lakh instead of ₹75 lakh [as speculated] is better because while we need to provide relief to small taxpayers, it is equally important to expand the tax base.”

Mr. Jaitley announced that the limit for eligibility for the Composition Scheme would be raised to an annual turnover of ₹1.5 crore from April 1, 2019. He added that companies opting for the Composition Scheme would be allowed to file annual returns and pay taxes quarterly from April 1.

The Composition Scheme currently allows companies with an annual turnover of up to ₹1 crore to opt for it, and file returns on a quarterly basis at a nominal rate of 1%. So far, only manufacturers and traders were eligible for this scheme.

Mr. Jaitley said that the Council had decided to extend the Composition Scheme to small service providers with an annual turnover of up to ₹50 lakh, at a tax rate of 6%.

“The option of composition scheme for small service providers is quite a welcome one,” Abhishek Jain, Tax Partner, EY India said. “Further, allowing a quarterly payment and annual return should bring quite a lot of relief and ease of doing business for small service providers.”

The Confederation of All India Traders, in a statement, said that increasing the GST threshold limit would allow about 10 lakh traders to be exempt from the compliance burden of GST, and added that increasing the Composition Scheme limit would benefit about 20 lakh small businesses that fall between the annual turnover brackets of ₹1 crore and ₹1.5 crore.

Kerala cess

The GST Council also decided to allow Kerala to levy a cess of up to 1% for up to two years on intra-State supplies to help finance the disaster relief efforts following the recent floods in the state.

“Allowing disaster cess of 1% to be introduced in the State of Kerala on local supplies… may be an administrative issue for both businesses and government and this may set a precedence for other States to demand additional levy,” Mr. Jain added.

As there were diverse and differing opinions on the issues of taxing real estate and lotteries, the GST Council decided to set up to separate Groups of Ministers to look into the issue and present their assessments to the Council, Mr. Jaitley said.

courtesy: hindu