In bid to give relief to small businesses, the Goods & Services Tax Council has increased the GST exemption threshold from Rs 20 lakh to Rs 40 lakh, thus extending the composition scheme to service providers.
According to the new exemption threshold, the minimum annual turnover for businesses supplying goods to register under the GST will come into effect from April 1, 2019, Finance Minister Arun Jaitley said.
Prime Minister Narendra Modi, during a public meeting in Agra recently, had said that he had urged the GST Council to raise the threshold limit for exemption.
Around 20 lakh taxpayers may choose to opt out of GST under the new higher exemption threshold. Currently, businesses below annual turnover of Rs 20 lakh are exempted from paying GST. The proposal is to increase this threshold for MSMEs.
Higher exemption threshold limit for supplier of Goods:There would be two Threshold Limits for exemption from registration & payment of GST for the suppliers of Goods i.e. Rs 40 lakh & Rs 20 lakh. States would have an option to decide about one of the limits within a weeks’ time.— Ministry of Finance (@FinMinIndia) January 10, 2019
The states which may opt for different registration threshold will not lead to any distortion as the exemption is only for taxpayers doing business within a state, Revenue Secretary Ajay Bhushan Pandey said.
Apart from reducing rates, the GST Council also rationalized and made clarifications related to certain goods, a move that is expected to boost consumption. The Council has allowed the state of Kerala to impose a natural calamity cess of up to 1 per cent on intra-state supply of goods and services for two years. “While this additional levy should help Kerala victims, companies as well as GST would need to modify their IT systems for incorporating this change,” said Abhishek Jain, an indirect tax partner at EY India