Tuesday, June 25, 2019


Relief for small businesses as GST exemption, composition scheme revived
Friday, 11 January, 2019, 16 : 00 PM [IST]
Ashwani Maindola, New Delhi
The GST Council, which held its latest meeting on Thursday, has announced relief for small businesses by recommending increment in Goods and Services Tax exemption threshold from Rs 20 lakh to Rs 40 lakh and extending the composition scheme from Rs 1 crore to Rs 1.5 crore.

The new threshold shall be effective from April 1, 2019, Finance Minister Arun Jaitley informed press persons on the occasion. He added that the states could decide if they wanted to maintain the exemption limit at Rs 20 lakh or Rs 40 lakh in a week’s time.

However, the threshold for mandatory registration of service providers would remain at Rs 20 lakh and Rs 10 lakh in special category states, according to a statement by Ministry of Finance. The higher exemption threshold will allow around 20 lakh taxpayers to opt out of GST if they choose to do so.

The statement released by the Ministry of Finance stated that changes made by CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018, and GST (Compensation to States) Amendment Act, 2018, along with amendments in CGST Rules, notifications and circulars issued earlier and the corresponding changes in SGST Acts would be notified with effect from February 1, 2019, while, the last date for passing the examination for GST practitioners to be extended till December 31, 2019, for those GST Practitioners who have enrolled under Rule 83(1)(b) i.e., who were sales tax practitioner or tax return preparer under the existing law for a period of not less than five years.

Meanwhile, reacting to the announcement, CII in a statement issued here stated that the Council’s decision to double the threshold limit for exemption from registration and payment of GST to Rs 40 lakh in the general category states brings huge relief to lakhs of small enterprises.

These would no longer be liable to prepare returns and pay taxes from April 1, 2019, enabling them to conduct their business smoothly.

CII also welcomed the extension of the composition scheme for services in particular. It stated that including suppliers of services and mixed suppliers under the composition scheme with a tax rate of 6% would greatly help small service providers and professionals earning less than Rs 50 lakh per annum. It would lower costs for buyers of these services down the supply chain as well.

Further, felicitating the GST Council for raising the turnover limit for the composition scheme from Rs 1 crore to Rs 1.5 crore, CII said that this would release numerous small enterprises from the procedural burden. Further, these enterprises can file returns annually, freeing them from the need to maintain documents on a quarterly basis.

A key decision of the GST Council was to set up a group of ministers to look at the possibility of introducing the composition scheme for the residential real estate sector.

While welcoming the decisions, the Confederation of All India Traders (CAIT) said that increasing the threshold limit from Rs 20 lakh to Rs 40 lakh is a welcome step and it is expected that nearly 10 lakh traders will be out from the clutches of GST with this announcement.

Further, raising the composition scheme limit from Rs 1 crore to Rs 1.5 crore was a much awaited decision and about 20 lakh small businesses will be benefitted as they fall under the bracket of Rs 1 crore to Rs 1.5 crore.

It is also appreciated that they will be now required to file only one annual return relieving them from the cumbersome procedure though tax has to be paid quarterly which is quite in line.

Also, threshold limit for composition scheme for services has been decided at Rs 50 lakh which is fair enough and about 10 lakh small service providers will be benefitted with this scheme. It is also appreciated that they have put under tax bracket of 6% which is quite reasonable, read the statement released by CAIT.

The traders’ body however said that the issues pertaining of early refunds to traders, lowering the GST rate for many household items need to be addressed. Filing of returns from monthly to quarterly is also another area where GST Council has to work.
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