The Goods and Services Tax (GST) bill, which was first introduced in the 2006-07 Union Budget, and finally passed in the Parliament in August last year (2016) came into effect on July 1st this year. Since then, the bill has been a bone of contention and caused much more trouble to merchants and business owners rather than the relief that was being anticipated by the government.
Seeing the growing unhappiness over the bill, the Modi government has decided to bring in some piecemeal reliefs. In the latest GST council meeting held on October 6, the council decided on various relief for Startups and Small and Medium Businesses.
For the uninitiated, under GST, all the major taxes in India like excise duty, octroi, service tax, special additional duty and VAT will be subsumed into a single tax called GST.
5 of the major recommendations that have been made by the GST council at its 22nd meeting for SMEs were:
1) Ease In Return Filing And Payments For Startups
In order to facilitate the ease of payment and return filing for SMEs with annual aggregate turnover up to Rs 1.5 crores, the council has recommended that starting from the third quarter (October-December) of this financial year, such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis.
Further, the registered buyers from such small taxpayers will also be able to avail ITC monthly. The due dates for filing the quarterly returns for such taxpayers will be made known soon. Meanwhile, all taxpayers will have to file FORM GSTR-3B monthly until December 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September 2017. Due dates for filing the returns for the month of July 2017 have already been announced. The due dates for the months of August and September 2017 will be announced soon.
2) GST To Be Paid On Advances Received From Customers Relaxed
During the meeting, it was uncovered that requirement to pay GST on advances received was proving to be quite a big headache for small dealers and manufacturers. So, in order to reduce their burden, the council decided that the taxpayers having annual aggregate turnover up to Rs 1.5 crores will not have to pay GST at the time of receipt of advances on account of supply of goods. They will required to pay GST on such supplies only when the supply of goods has been successfully made.
3) Reverse Charge On Inward Supply From Unregistered Taxpayers Has Been Suspended
The council meeting recommended that the reverse charge mechanism under Sub-section (4) of Section 9 of the CGST Act, 2017, and under Sub-section (4) of Section 5 of the IGST Act, 2017, will be suspended till March 31, 2018. It will be reviewed again by a committee of experts after the end of the intended period. Experts are optimistic that this move will have small businesses in reducing their compliance costs substantially.
4) Service Providers Making Interstate Supply Are Exempted Up to Rs 20 Lakhs From Registration Under the GST Bill
For the uninitiated, anyone who is making inter-state taxable supplies, except inter-state job worker, has to register, irrespective of their turnover. This particular rule was hampering the export sector the most. Although exports has been categorised as “zero-rateded” and hence 0% GST was applicable to it, but since exports were essentially “inter-state sales”, hence registration was mandatory for them.
Under the new recommendations, it has been decided that those service providers whose annual aggregate turnover is less than Rs 20 lakhs (Rs 10 lakhs in special category states except J & K) will be exempted from obtaining registration even if they are making inter-state taxable supplies of services. This particular recommendation is most likely to reduce the compliance cost of small service providers.
5) Composition Scheme Threshold Increased
According to new recommendations made by the GST council in its latest meeting, the composition scheme will be made available to taxpayers having an annual aggregate turnover of up to Rs 1 crore as compared to the current turnover threshold of Rs 75 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand will be Rs 1 crore. This threshold of turnover for special category states, except Jammu & Kashmir and Uttarakhand, will be increased to Rs 75 lakhs from Rs 50 lakhs.
This increase in the turnover threshold will allow a greater number of taxpayers to avail the benefit of easier compliance under the composition scheme. It is also expected to benefit the MSME sector greatly.
This development was first reported in YourStory.
Seeing the growing unhappiness over the bill, the Modi government has decided to bring in some piecemeal reliefs. In the latest GST council meeting held on October 6, the council decided on various relief for Startups and Small and Medium Businesses.
For the uninitiated, under GST, all the major taxes in India like excise duty, octroi, service tax, special additional duty and VAT will be subsumed into a single tax called GST.
5 of the major recommendations that have been made by the GST council at its 22nd meeting for SMEs were:
1) Ease In Return Filing And Payments For Startups
In order to facilitate the ease of payment and return filing for SMEs with annual aggregate turnover up to Rs 1.5 crores, the council has recommended that starting from the third quarter (October-December) of this financial year, such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis.
Further, the registered buyers from such small taxpayers will also be able to avail ITC monthly. The due dates for filing the quarterly returns for such taxpayers will be made known soon. Meanwhile, all taxpayers will have to file FORM GSTR-3B monthly until December 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September 2017. Due dates for filing the returns for the month of July 2017 have already been announced. The due dates for the months of August and September 2017 will be announced soon.
2) GST To Be Paid On Advances Received From Customers Relaxed
During the meeting, it was uncovered that requirement to pay GST on advances received was proving to be quite a big headache for small dealers and manufacturers. So, in order to reduce their burden, the council decided that the taxpayers having annual aggregate turnover up to Rs 1.5 crores will not have to pay GST at the time of receipt of advances on account of supply of goods. They will required to pay GST on such supplies only when the supply of goods has been successfully made.
3) Reverse Charge On Inward Supply From Unregistered Taxpayers Has Been Suspended
The council meeting recommended that the reverse charge mechanism under Sub-section (4) of Section 9 of the CGST Act, 2017, and under Sub-section (4) of Section 5 of the IGST Act, 2017, will be suspended till March 31, 2018. It will be reviewed again by a committee of experts after the end of the intended period. Experts are optimistic that this move will have small businesses in reducing their compliance costs substantially.
4) Service Providers Making Interstate Supply Are Exempted Up to Rs 20 Lakhs From Registration Under the GST Bill
For the uninitiated, anyone who is making inter-state taxable supplies, except inter-state job worker, has to register, irrespective of their turnover. This particular rule was hampering the export sector the most. Although exports has been categorised as “zero-rateded” and hence 0% GST was applicable to it, but since exports were essentially “inter-state sales”, hence registration was mandatory for them.
Under the new recommendations, it has been decided that those service providers whose annual aggregate turnover is less than Rs 20 lakhs (Rs 10 lakhs in special category states except J & K) will be exempted from obtaining registration even if they are making inter-state taxable supplies of services. This particular recommendation is most likely to reduce the compliance cost of small service providers.
5) Composition Scheme Threshold Increased
According to new recommendations made by the GST council in its latest meeting, the composition scheme will be made available to taxpayers having an annual aggregate turnover of up to Rs 1 crore as compared to the current turnover threshold of Rs 75 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand will be Rs 1 crore. This threshold of turnover for special category states, except Jammu & Kashmir and Uttarakhand, will be increased to Rs 75 lakhs from Rs 50 lakhs.
This increase in the turnover threshold will allow a greater number of taxpayers to avail the benefit of easier compliance under the composition scheme. It is also expected to benefit the MSME sector greatly.
This development was first reported in YourStory.
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