The Goods and Services Tax (GST) Council in its 32nd meeting took the decision to reduce the tax and compliance burden on the small and medium enterprises, including increasing the threshold limit below which companies are exempt from Goods and Service Tax, extending the Composition Scheme to small service providers, and allowing small companies to file annual returns.
On Thursday, Finance Minister Arun Jaitley announced that that the limit for eligibility for the Composition Scheme would be raised to an annual turnover of Rs.1.5 crore from April 1, 2019. He also added that companies opting for the Composition Scheme would be allowed to file annual returns and pay taxes quarterly from April 1 onwards.
The council has also increased the Goods and Service Tax exemption limit to Rs 20 lakh from Rs 10 lakh for the northeastern states and Rs 40 lakh, from Rs 20 lakh for rest of the states.
Mr Jaitley also mentioned under the Good and Service Tax regime, service taxpayers with earnings up to Rs 50 lakh per annum will be taxed at 6 per cent. There will be only one tax return for entities who opt for composition scheme.
In the last meeting which was held on December 22, Jaitley said that based on the report of the fitment and law committee, Council will decide on Goods and Service Tax rate of residential properties, with a provision for claiming an input tax credit (ITC). Homebuyers of real estate properties do not have to pay GST if they purchase a ready-to-move-in property after the issue of completion certificate as it considered as ‘transfer of property’ and comes under state’s jurisdiction of stamp duty.
Archit Gupta, founder and CEO of Clear Tax, said: “Composition scheme for small service providers and quarterly payment of taxes will improve compliance and reduce the effort required by them significantly. The GST Council must continue to focus ITC claim process and simplification of GST returns as they are the cornerstones for GST success.”
In this new proposal of GST, The GST council has also decided to allow Kerala to levy a cess of up to 1% for up to two years on intra-state supplies to help finance the disaster relief efforts following the recent floods in the State.