Threshold limit for mandatory registration of suppliers of goods doubled to
₹40 lakh
Small businesses can breathe easy now as the Goods and Services Tax
Council has decided to double the basic threshold limit for goods suppliers.
However, the Council, which took a slew of decisions on Thursday, could not
arrive at a consensus on lowering the levy on under-construction flats.
The 32 meeting of the Council chaired by Finance Minister Arun Jaitley
decided to raise the basic threshold limit for suppliers of goods (for
mandatory GST registration) to ₹40 lakh from the current ₹20 lakh. Also,
some of the north-eastern and hilly states will have a new limit of ₹20 lakh
from ₹10 lakh earlier.
However, there is no change in the limit for services. The threshold for
registration of service providers would continue to be ₹20 lakh, and in case
of special category States, ₹10 lakh.
‘States can fix threshold’
“The States will have the freedom to change the threshold,” Finance Minister
Arun Jaitley told reporters after the meeting. Any State, which would like to
exercise the freedom, has to inform the Council’s Secretariat within one
week. Jaitley said that this will be a one-time concession.
Stating that there will be notional revenue loss, Jaitley added that over 20
lakh assesses could go out of the GST net.
Archit Gupta, Founder & CEO of ClearTax, said that increasing the basic
registration threshold will benefit small businesses as it will reduce their
compliance cost and efforts. However, suppliers selling to other businesses
must continue with full compliance if they want to pass on the input tax
credit benefit to their buyers, he said. “Service providers will be relieved with
the composition scheme; even though the rate is higher, their compliance
cost will go down significantly,” he added.
The Council also decided on the new structure for the composition scheme
that will come into effect from April 1, 2019. Trading, manufacturing and
restaurant businesses with annual turnover of ₹1.5 crore can be part of the
scheme.
Though the tax rates will be same at one per cent (trading and
manufacturing) and five per cent (restaurants), such businesses will now be
required to file returns annually and not quarterly. But taxes should be paid
quarterly along with a simple declaration.
Special composition scheme
The Council also decided to bring in a special composition scheme for small
services providers.
Any such providers with an annual turnover of up to ₹50 lakh will be eligible.
Here, the GST rate would be 6 per cent. The scheme will also cover mixed
suppliers such as electricians and plumbers.
Source: The Hindu Business Line, India Friday, 11 January 2019