GST Council doubles tax exemption limit for small businesses, raises composition scheme cap
More businesses will now be able to opt out of the GST net after the exemption limit of turnover was raised to Rs 40 lakh for most states.
The Goods and Services Tax Council on Thursday doubled the exemption limit for businesses that choose to opt out of the indirect taxation system and raised the threshold for businesses to avail the composition scheme. The move will give relief to micro, small and medium enterprises, Union Finance Minister Arun Jaitley said after the 32nd meeting of the council.
Businesses in the North East with a turnover of Rs 20 lakh and firms with Rs 40-lakh turnover in other states can now choose to opt out of the GST net. The limits were Rs 10 lakh and Rs 20 lakh till now. States can now either choose the Rs 20 lakh limit or the Rs 40 lakh limit, Jaitley said.
Also, from the next fiscal year, businesses with annual turnover of Rs 1.5 crore will be able to pay GST at a fixed rate of their earnings under the composition scheme. The current limit is Rs 1 crore.
The composition scheme helps small taxpayers avoid tedious paperwork by not having to file multiple returns and just pay a flat rate. Those who come under the scheme will pay taxes quarterly, but file returns annually, Jaitley announced. He added that the scheme will now also include those who provide services with a turnover of up to Rs 50 lakh.
FM Arun Jaitley after GST meet: From 1st April 2019, composition scheme limit will be increased to 1.5 crores. Those who come under the composition scheme will pay tax quarterly, but the return will be filed only once a year. Council approved composition scheme for Services pic.twitter.com/xy4bMJeJIN
— ANI (@ANI) January 10, 2019
The minister added that Kerala, which was devastated by floods last year, has been allowed to impose 1% calamity cess on intra-state sales for two years. A group of ministers has been constituted to consider taxes on real estate and lottery, he added.