Govt issues notification on GST exemption limit up to Rs 40 lakh
The government on Thursday issued three notifications to implement a slew of concessions for small businesses, including doubling of Goods and Services Tax (GST) exemption limit to Rs 40 lakh.Updated: Mar 07, 2019 23:33 IST
The government on Thursday issued three notifications to implement a slew of concessions for small businesses, including doubling of Goods and Services Tax (GST) exemption limit to Rs 40 lakh. The move is expected to benefit an additional two million micro, small and medium enterprises (MSMEs), a key political constituency, ahead of the crucial general elections.
“These notifications shall come into effect from the 1st of April, 2019,” a finance ministry statement said. The decisions were announced on January 10 after the GST Council’s 32nd meeting.
According to experts, the sector was expecting a formal execution of the decisions before the announcement of election dates that would lead to the implementation of the model code of conduct.
According to the changed rules, state governments would opt for one of the two threshold limits for MSMEs: Rs 40 lakh and Rs 20 lakh. MSMEs having a turnover above these limits would be mandatorily required to get the GST registration for suppliers of goods. “States would have an option to decide about one of the limits. The threshold for registration for service providers would continue to be Rs 20 lakh and in case of special category states Rs 10 lakhs,” the statement said.
The new norms also offer a composition scheme for services and mixed suppliers [one supplier offering two or more goods and services] at a tax rate of 6% provided they have up to Rs 50 lakh annual turnover in the preceding financial year. Under the composition scheme, small businesses are allowed to pay GST at a flat rate. A third notification has enhanced the turnover limit for the existing composition scheme to Rs 1.5 crore. “Special category states would decide about the Composition Limit in their respective states,” the statement said.
Abhishek Jain, tax partner, EY India, said, “Implementation of these proposals, with specifically the higher turnover limit for composition schemes, would aid enhancing the ease of doing business for MSMEs.”