GST exemption limit doubled to Rs 40 lakh
New Delhi: In a bid to give relief to small businesses, the GST Council Thursday doubled the limit for exemption from payment of goods and services tax (GST) to Rs 40 lakh and announced that the higher turnover cap of Rs 1.5 crore for availing composition scheme of paying 1 per cent tax will be effective from April 1.
The Council also allowed Kerala to levy a 1 per cent calamity cess on the intra-state sale of goods and services for a period of up to two years to mobilise revenues to meet the cost of rehabilitating parts of states that were ravaged by floods last year.
Finance Minister Arun Jaitley said the taxpayers with an aggregate turnover of Rs 40 lakh would now be exempted from the GST. For the northeastern states, the exemption would now be Rs 20 lakh. Currently, businesses with a turnover of up to Rs 20 lakh is exempt from GST registration, while the limit for hilly and northeastern states is Rs 10 lakh.
Sources said the annual revenue loss on account of doubling exemption limit to Rs 40 lakh, considering that all states implement it, is Rs 5,200 crore.
Jaitley said the GST Composition Scheme, under which small traders and businesses pay a 1 per cent tax based on turnover, can be availed by firms with a turnover of Rs 1.5 crore, against the earlier Rs 1 crore, with effect from April 1.
Also, service providers and suppliers of both goods and services up to a turnover of Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6 per cent.
The twin decision under the composition scheme would have an annual revenue impact of about Rs 3,000 crore.
Jaitley said these decisions would give relief to micro, small and medium enterprises (MSMEs).
On GST rate for real estate, the council has decided to form a seven-member group of ministers after differences of opinion emerged at the meeting, he said, adding there were diverse views on a lottery. A ministerial panel will look into it as well.
Jaitley said those opting for the composition scheme would have to file just one tax return annually but pay taxes once every quarter.
Uttarakhand finance minister Prakash Pant emphasised that the decision of GST council would help the state in generating more employment.