In a bid to give relief to small businesses, the GST Council at a meeting concluded today has raised the threshold for availing Composition Scheme with turnover up to 1.5 crores. Also, Service Providers may be able to avail composition scheme starting April 1 2019.
It also doubled the exemption limit while raising the threshold for availing the composition scheme. The twin move would give relief to micro, small and medium enterprises (MSMEs).
Key take aways from the Council meet for your view:
- Those who avail composition scheme may pay tax annually and file returns on an annual basis.
- The scheme has been extended to Service Providers, therefore Suppliers of Services or both Goods and Services with turnover up to Rs 50 lakhs will be entitled to avail composition Scheme.
- Rate for Services under composition scheme is fixed at 6 percent.
- The 6 percent is lower than Service tax and GST paid previously on Services. Thus, those suppliers who were not permitted to avail Composition Scheme either due to exceeding threshold limits or providing Services have are expected to be relieved.
- GST exemption limit doubled to Rs 40 lakh annual turnover; Rs 20 lakh for north eastern states.
- GST Council allows Kerala to impose 1 pc cess on intra-state sales for up to 2 yrs
- Group of Ministers (GOM) constituted to consider GST on real estate, lottery after differences of opinion in GST Council.
The GOM set up early in October headed by Assam Finance Minister Himanta Biswa Sarma, had recommended that the threshold limit of the composition scheme, that allows small businesses to pay taxes at a lower rate without availing any input tax credits, be raised to Rs 1.5 crore from Rs. 1 crore curently.
A GOM was tasked with revisiting the tax structure of different categories of restaurants with the aim of rationalising or reducing the rates, apart from making composition scheme more attractive for businesses.