Indian Economy & Policy |
January 31Good news on GST for MSMEs
The 32nd
GST Council, which is the most important decision making body under the GST
regime, met on January 10. This meeting concluded with a range of much awaited and
long overdue reliefs and exemptions for the Micro, Small and
Medium Enterprises (MSMEs) sector.
The highlight was that smaller MSMEs will now get
relief from registering under GST, as the government doubled the exemption
threshold level, in terms of minimum annual sales from the earlier INR 20 lakh to
INR 40lakh. So, effectively, those with annual sales of less than Rs 40 lakh
will not have to register under GST and mandatorily file their GST returns. For
hilly states and North Eastern states, the threshold has also been doubled to INR
20 lakh. These GST turnover limits will become effective from 1st April 2019.
Another positive for small
business people was a change announced with respect to the GST Composition
Scheme. Under this scheme, currently, small traders and businesses with a
turnover of up to INR 1 crore can avoid GST
formalities by paying GST at a fixed rate of 1% of their turnover. The Council
decided that with effect from April 1this
benefit can be availed by businesses with a turnover of INR
1.5 crore , against the earlier INR 1 crore threshold limit.
Other attractive features of the
Composition Scheme are that enterprises that opt for this scheme will have to
file just one tax return annually, against the earlier
requirement to file GSTR-4 return every quarter; they
will, however, have to pay taxes once every quarter. Additionally, small
assesses, with a turnover of up to INR 1.5 crore can avail free accounting and
billing software.
The
benefits of the Composition Scheme have also been extended to service
providers, which until now was only applicable to manufacturers and traders,
who have a turnover of less than Rs.50 lakhs. This scheme will be applicable to
both service providers and receivers who are not eligible for the presently available
scheme. These service providers can pay GST at the rate of 6% (3% CGST +3%
SGST) of their turnover from the new financial year (1st April 2019).
They will, however, not be eligible to claim Income Tax Credit once they enrol
for the Composition Scheme.
It was a good day for the MSME
sector; even the Finance Minister, Shri Arun Jaitley tweeted, "The GST
Council in its 32nd meeting today accorded massive relief for MSME
sector."