Big relief for small businesses under GST

Big relief for small businesses under GST

News:

GST exemption limit doubled to give relief to small businesses

Important Facts:

Highlights of the GST Council report

• Basic threshold limit for suppliers of goods (for mandatory GST registration) has been increased to ₹40 lakhs from the current ₹20 lakhs. Also, some of the north-eastern and hilly states will have a new limit of ₹20 lakhs from ₹10 lakhs earlier.
• However, there is no change in the limit for services. The threshold for registration of service providers would continue to be ₹20 lakhs, and in case of special category States, ₹10 lakhs.
• Services sector will now be eligible for benefits under the composition scheme, which was only applicable to manufacturers and traders earlier.
• GST Composition Scheme, under which small traders and businesses pay a 1 per cent tax based on turnover, can be availed by businesses with a turnover of Rs 1.5 crore, against the earlier Rs 1 crore, with effect from April 1, 2019
• The Council also approved recommendations pertaining to calamity cess in Kerala.

Significance:

• Increasing the basic registration threshold will benefit small businesses as it will reduce their compliance cost and efforts.

Composition scheme

• Composition Scheme is an alternative method of levying a tax under GST.
• Small businesses registered under the GST composition scheme can pay GST at a fixed rate of turnover every quarter and file quarterly GST returns.
• Eligibility: – Everyone isn’t qualified to enroll under the GST composition scheme. Citizens or taxpayers whose yearly turnover is 1.5 crore in a Financial year. Turnover for extraordinary classification States, aside from Jammu and Kashmir and Uttarakhand, the limit is presently expanded to Rs 75 Lacs.