GST Council Meet: GST threshold limit increased: In a approach to give relief to small businesses, the GST Council on Thursday doubled up the extension period for the exemption from paying of goods and services tax (GST) to Rs 40 lakh and also announced that the higher turnover cap of Rs 1.5 crore for availing composition scheme of paying 1 percent tax will be effective from 1 April.
GST Council Meet: GST exemption limit increased from Rs 20 lakhs to Rs 40 lakhs
The Council also permitted Kerala to charge with a 1 percent calamity cess on an intra-state sale of goods and services for a period of up to two years to mobilise returns to meet the cost of reorienting parts of states that were destroyed by the floods last year.
Finance minister Arun Jaitley said that the taxpayers with a total income of Rs 40 lakh would now be discharged from the GST. For the North-Eastern states, the exemption given would now be Rs 20 lakh. Now, businesses with a turnover of up to Rs 20 lakh are relieved from GST registration. On the other hand, the limit for hilly and North-Eeastern states is Rs 10 lakh.
According to the sources, the annual revenue loss by doubling the exemption limit to Rs 40 Lakh is about Rs 5,200 crore in whole sum of all the states.
“A very large part of GST comes from the formal sector and large companies. Each one of these decisions is intended to help the SMEs. You have given them various options. If they are in the services sector, they can get 6 percent compounding, if they are in manufacturing and trading up to Rs 1.5 crore they can get 1 percent compounding. They can make use of exemption of up to Rs 40 lakh,” Arun Jaitley said.
Jaitley told reporters, “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.”
Ajay Bhushan Pandey (Revenue Secretary) said that even the exemption limit is Rs 20 Lakh but there are many taxpayers (Approx 10 Lakh) those who have turnover below Rs 20 lakh but still are paying the 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.
Shushil Modi posted a tweet on twitter that said, “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.”
“(Rs) 50 lakh turnover & 6% tax rate for service providers in a new Composition scheme in GST. Again Chattisgarh & Congress-ruled states wanted 8 percent GST. Outside Congress say lower tax rates & in meeting fight for higher tax rates,” Modi added.