GST Burden on Small Business eased
11, Jan 2019
Prelims level : Economy Mains level : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
- The GST Council in its 32nd meeting 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.
- It also raised the annual turnover limit under which companies would be exempt from GST to Rs. 40 lakhs for most States and Rs. 20 lakhs for the North Eastern and hill states, from the earlier limit of Rs. 20 lakh and Rs. 10 lakhs, respectively.
- The limit for eligibility for the Composition Scheme would be raised to an annual turnover of Rs. 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 Rs. 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
- The Council had decided to extend the Composition Scheme to small service providers with an annual turnover of up to Rs. 50 lakhs, at a tax rate of 6%.
- 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 Rs. 1 crore and Rs. 1.5 crore.
- 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.
- 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
Benefits of these moves:
- Allowing a quarterly payment and annual return should bring quite a lot of relief and ease of doing business for small service providers.
- Also, increasing the threshold to Rs. 40 lakhs is better because it provides relief to small taxpayers, and also it is equally important to expand the tax base
- Goods & Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.
- As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the States shall consist of the following members:
- The Union Finance Minister-Chairperson
- The Union Minister of State in charge of Revenue or Finance-Member
- The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government-
- As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.