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GST burden on small businesses eased
Why is it in the news ?
- The GST Council in its 32nd meeting, the last before the Budget took a slew of decisions aimed at reducing the tax and compliance burden on small and medium enterprises.
- The council increased the threshold limit below which companies are exempt from GST.
More in the news
- The Council has decided to double the exemption threshold to Rs 40 lakh and hike the limit for composition scheme to Rs 1.5 crore from Rs 1 crore with effect from April 1.
- The threshold will be Rs 20 lakh for “some hilly/northeastern states”
- The Composition Scheme currently allows companies with an annual turnover of up to Rs.1 crore to opt for it, and file returns on a quarterly basis at a nominal rate of 1%.
- Now, Council decided to extend the Composition Scheme to small service providers with an annual turnover of up to Rs.50 lakh, at a tax rate of 6%.
- So far, only manufacturers and traders were eligible for this scheme.
- Now the council extended the Composition Scheme to small service providers, and allowing small companies to file annual returns.
Impact:
- Allowing a quarterly payment and annual return should bring quite a lot of relief and ease of doing business for small service providers.
- The Confederation of All India Traders, in a statement, said that increasing the GST threshold limit would allow about 10 lakh traders to be exempt from the compliance burden of GST, and added that increasing the Composition Scheme limit would benefit about 20 lakh small businesses that fall between the annual turnover brackets of Rs.1 crore and Rs.1.5 crore.
Source
The Hindu.