GST exemption limit doubled, J&K among firsts to enhance threshold

TNN Bureau. Updated: 1/11/2019 11:23:51 AM Front Page

Bonanza for Small Businesses

JAMMU: In a massive relief to small businesses, the GST Council Thursday doubled the limit for exemption from payment of goods and services tax (GST) to Rs 40 lakh and announced that the higher turnover cap of Rs 1.5 crore for availing composition scheme of paying 1 per cent tax will be effective from April 1.

The states were given the option to choose between two thresholds -- Rs 40 lakh and Rs 20 lakh -- for exemption from registration and payment of the GST for the suppliers of goods, with the facility that one can 'opt up or opt down' depending on revenue.

While the GST Council gave time of one week for states to decide, Jammu and Kashmir was among the first states in the country to decide within hours.

“The State administration led by Governor Satya Pal Malik has decided to enhance threshold, composition limit under GST as proposed by the GST Council in its 32nd meeting held here today,” a spokesman said Thursday night.

At the council’s meeting, Finance Minister Arun Jaitley said the taxpayers with an aggregate turnover of Rs 40 lakh would now be exempted from the GST. For the north eastern states, the exemption would now be Rs 20 lakh. Currently, businesses with a turnover of up to Rs 20 lakh is exempt from GST registration, while the limit for hilly and north eastern states is Rs 10 lakh.

Sources said the annual revenue loss on account of doubling exemption limit to Rs 40 lakh, considering that all states implement it, is Rs 5,200 crore.

Jaitley said the 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.

Also, service providers and suppliers of both goods and services up to a turnover of Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6 per cent.

The twin decision under the composition scheme would have an annual revenue impact of about Rs 3,000 crore.

"The GST Council in its 32nd meeting today accorded massive relief for MSME sector," Jaitley tweeted.
The finance minister said there would be two thresholds -- Rs 40 lakh and Rs 20 lakh -- for exemption from registration and payment of the GST for the suppliers of goods, with the facility that one can 'opt up or opt down' depending on revenue.

"Few states had a view that if the turnover threshold is hiked to Rs 40 lakh, their assessee base gets eroded. So if they inform the Secretariat within a week then they would be given the option to opt down. Puducherry has kept this option... This is a one time exception and does not affect businesses with inter-state supplies," Jaitley told reporters.

The Group of Ministers led by Bihar Deputy Chief Minister Sushil Modi on giving relief to MSMEs had on Sunday, among other things, decided to increase exemption threshold to Rs 40 lakh for business doing intra-state movement of goods. The decisions were placed before the Council on Thursday.

"Threshold limit increased from (Rs) 20 to 40 Lakh in GST. Kerala & Chattisgarh insisted on (Rs) 20 Lakh. So states given option either remain in (Rs) 20 or 40 lakh," Modi tweeted.

Revenue Secretary Ajay Bhushan Pandey said even though currently the exemption limit is Rs 20 lakh, but still there are about 10.93 lakh taxpayers who are below Rs 20 lakh but are paying taxes.

"The increased (exemption) limit (of Rs 40 lakh) is applicable for those businesses who deal in goods and also do intra-state trade and not for those who do inter-state transactions," Pandey said.

Meanwhile, Governor Satya Pal Malik’s Administration has decided to enhance threshold, composition limit under GST as proposed by the GST Council in today’s meeting.

“The State of Jammu and Kashmir was represented by Advisor to Governor, Kewal Kumar Sharma who also holds the charges of Finance Department. Principal Secretary Finance, J&K, Navin K Choudhary and Commissioner State Taxes, P K Bhat were also present at the meeting,” a spokesman said.

“For the benefit of small and marginal businesses, the Government of Jammu and Kashmir decided to opt the threshold for registration in respect of goods to Rs. 40 lakh despite being a special category state.

“J&K Governor’s Administration also opted to raise the limit of composition to Rs 1.5 crore from current limit of Rs. 1.00 crore to benefit small traders and manufacturers who will now pay quarterly tax and have to file annual return only thereby reducing their compliance burden. These decisions are to be implemented by the Government from April 2019,” he said.

Advisor to Governor, Kewal Kumar Sharma, while taking part in the discussion during the meeting stated that these measures will ease the compliance burden on the dealers simultaneously relieving the small and marginal dealers from seeking registration under GST law.

The Advisor also supported the proposal for composition scheme to small service providers having an annual turnover of Rs 50 lakhs in order to provide relief to small businesses in this sector.

The GST Council also decided to introduce a free billing and accounting software for small businesses having an annual turnover of Rs 1.5 crore.

The Advisor supported the proposal and the initiative taken by the Goods and Services Tax Council (GSTC) which will provide assistance and necessary support to the small and marginal traders/manufacturers in the field of accounting for better and easy compliance under the GST law.


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