Exemption in GST registration extended: Benefit begins 1 April

There will be two threshold limits for exemption from registration and payment of GST for the suppliers of goods: Rs 40 lakh and Rs 20 lakh; a State can choose either

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GST registration exemption
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New Delhi: The Union government notified on Thursday its decision to raise the limit of exemption from registration in GST for businesses of annual turnover to Rs 40 lakh. Under this rule, the relaxation will be applicable from 1 April onwards. This will benefit small and medium enterprises.

Apart from this, a one-time tax (composition) scheme for businesses with turnover up to Rs 1.5 crore will be applicable beginning 1 April too.

Moreover, the service provider and supplier of both goods and services are eligible for the GST choice of a lump sum scheme. They can be taxed at a rate of 6% from the beginning of the next financial year. But for this, they will not get the benefit of input tax.

These decisions were taken by the GST Council headed by Finance Minister Arun Jaitley on 10 January. The finance ministers of all states are members of the council.

According to a statement of the finance ministry, these rules will come into force with effect from 1 April.

The statement said there would be two threshold limits for the exemption from registration and payment of GST for the suppliers of goods — Rs 40 lakh and Rs 20 lakh. A State could choose one of the limits.

It said further that the threshold for registration for service providers would continue to be Rs 20 lakh and, in the case of Special Category States, Rs 10 lakh.

The GST one-time plan will benefit businesses with a turnover of up to Rs 1.5 crore. This limit was Rs 1 crore earlier. Under the new tax regime, the traders have to pay a percentage tax. This will be effective from 1 April.

Economic analysts are seeing the move as a sequel in the series of Narendra Modi government’s effort to continuously enhance the ease of doing business in India. Ernst and Young India Tax Partner Abhishek Jain has been quoted by Live Mint as saying that implementation of these proposals, with specifically the higher turnover limit for composition schemes, would aid enhancing the ease of doing business for MSMEs.

As reported by Sirf News earlier, the Union government will reduce the rate of corporate tax to 25% for all major companies too — after a further improvement in the goods and services tax (GST) collection, Jaitley assured industry secretary of FICCI Sandeep Somani in a meeting.