GST Council 32nd meeting: Relief to MSMEs & Other Highlights

GST Council 32nd meeting: Relief to MSMEs & Other Highlights

Chaired by finance minister Arun Jaitley, the GST Council concluded its 32nd meeting on Thursday. All the decision that had been taken in this meeting with respect to GST turnover limit and composition scheme changes would be effective from 1st April 2019. In the meeting, the Government took steps to provide compliance relief to Medium and small enterprises (MSMEs) by providing various reliefs and exemptions as discussed in this article.

GST turnover limit hiked

• The government will exempt MSMEs with annual sales of up to Rs40lakh ($56,701) from paying taxes under GST from the earlier Rs20 lakh. For hilly states and North Eastern states, the threshold has been doubled to Rs20 lakh. These states will now be able to choose if they want to keep the GST exemption limit at Rs20 lakh or Rs40 lakh.
• The Council has allowed the state of Kerala to impose a cess of up to 1% on intrastate sales for two years.
• States would have an option to decide about one of the limits within a week’s time as the State’s revenue is also tied to GST. This decision will now lead to various States having different GST threshold limits over time.
• Service providers will have to register for GST once they cross a turnover of Rs.20 lakhs with the exception that Special Category States at Rs 10 lakhs.

GST composition scheme limit

The Government has given a thrust to the GST Composition Scheme with the following three changes:

Increase in Turnover Limit

The limit of Annual Turnover for availing Composition Scheme for Goods has been raised to Rs 1.5 crore at 1% GST rate. Special category States must decide, within one week, about the Composition Limit in their respective States.

Yearly Return

Persons enrolled under the Composition Scheme were earlier required to file GSTR-4 return every quarter. Now to ease the compliance burden, a single annual return with quarterly tax payments has been introduced for the Composition Scheme.

Service Providers Eligible

Service providers who have a turnover of fewer than Rs.50 lakhs are also now made eligible to enroll for the Composition Scheme. These service providers would have to pay GST at the rate of 6% (3% CGST +3% SGST) of turnover. It’s important to note that those enrolled under Composition Scheme are not eligible to claim Input Tax Credit (ITC).

This scheme shall be applicable to both Service Providers and Receivers, who are not eligible for presently available Scheme.

Free Accounting Software

The Government has also decided to provide a free accounting and billing software for small taxpayers to enable easier GST compliance.

GST Cess

Finally, the GST Council approved the levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not of not more than 1% for a period not exceeding 2 years. This will be used as revenue mobilization for supporting the natural calamity.

Relief for Real Estate Sector

A seven-member committee has been set up to consider real estate GST rates, on which consensus has not been reached yet to Boost the Residential Segment of the Real Estate Sector.