New Delhi: In a bid to give relief to small businesses, the GST Council doubled Thursday 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 one per cent tax will be effective from April 1.
Finance Minister Arun Jaitley said the taxpayers with an aggregate turnover of Rs 40 lakh would now be exempted from the GST. For the north eastern states, the exemption would now be Rs 20 lakh. Currently, businesses with a turnover of up to Rs 20 lakh are exempt from GST registration, while the limit for hilly and north eastern 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 expected to be Rs 5,200 crore.
Jaitley said the GST Composition Scheme, under which small traders and businesses pay a one per cent tax based on turnover, can be availed by businesses 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 six per cent.
Jaitley said these decisions would give a relief to micro, small and medium enterprises (MSMEs). “India will exempt small businesses with annual sales of up to Rs 40 lakh ($56,701) from paying taxes under the GST,” Jaitley told reporters.
Many however, are seeing the move as one that could garner public support for the BJP ahead of the general elections which must be conducted by May this year.