Providing a huge relief to small businesses and service providers, the GST Council has doubled up the annual turnover limit for GST exemption from Rs 20 lakh to Rs 40 lakh for the composition scheme.
The decision was made during the 32nd GST Council meeting today, and announced the exemption of all businesses with turnover of Rs 40 lakh or less annually will no more be liable to pay the Goods and Service Tax. Also, the GST exemption limit of north eastern states have been extended from Rs 10 lakh to Rs 20 lakh annually. The move will provide huge relief to smaller taxpayers, which is a segment that has been struggling to survive after losing exemptions enjoyed by them in the pre-GST regime.
The exemption limit extension is GST Council’s effort to correct the smaller service provider, who were ordered to provide relatively higher tax rate of 18%. Besides this, the small businesses are often locally run, and the frequent online return filing was a cumbersome compliance. Hence, changing the existing GST regime, the reduction of filing returns through the year, as businesses will now pay tax on a quarterly basis but the returns will be filed annually under the GST composition scheme. All service providers and suppliers of both goods and services with a turnover of Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6 per cent.