GST Council increases exemption limit, extends composition scheme to services

Finance Minister Arun Jaitley addressing the media after the 32nd meeting of the GST Council at Vigyan Bhavan in New Delhi on Thursday.   | Photo Credit: R.V. Moorthy

The Goods and Services Tax (GST) Council on Thursday, took a slew of decisions aimed at reducing the tax and compliance burden on small and medium enterprises, including increasing the threshold limit below which companies are exempt from GST, extending the composition scheme to small service providers, and allowing small companies to file annual returns.

It is the GST Council's 32nd and last meeting before the Union budget.

Union Finance Minister Arun Jaitley announced that the limit for eligibility for the composition scheme would be raised to an annual turnover of ₹1.5 crore from April 1, 2019. Companies opting for the scheme would be allowed to file annual returns and pay taxes quarterly from April 1 onwards.

The scheme now allows companies with an annual turnover of up to ₹1 crore to opt for it, and file returns on a quarterly basis at a nominal rate of 1%. So far, only manufacturers and traders were eligible for this scheme.

Mr. Jaitley said it was decided to extend the scheme to small service providers with an annual turnover of up to ₹50 lakh, at a tax rate of 6%.

Regarding the annual turnover limit under which the GST would not be applicable if the company so chooses, he said the limit had been raised to ₹40 lakh for most States and ₹20 lakh for the north-eastern and hill States, from the earlier limit of ₹20 lakh and ₹10 lakh, respectively.

Kerala allowed to collect cess

The GST Council 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.

As there were diverse and differing opinions on taxing real estate and lotteries, the GST Council decided to set up to separate Groups of Ministers to look into the issue and present their assessment to the Council, Mr. Jaitley said.

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Printable version | Oct 22, 2021 6:43:49 PM |

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