GST Composition scheme for small taxpayers extended to Rs. 1.5 crore
On the 23rd meeting of the GST Council held in Guwahati has decided to increase the threshold for composition scheme to Rs. 1.5 crore and also decided to amend the law to increase the statutory threshold to the Rs.2 crore.
In 22nd meeting of October, the GST council was decided to increase the threshold for composition scheme to Rs. 1 crore from the original Rs. 75 lakh.
Finance Secretary Hasmukh Adhia said that it is the only proposal and will only happen after the amendment of the law.
Mahesh Jaising, Partner, Deloitte India said “There has been an increase in the threshold to Rs 1.5 Crores from the 1 Crore limit. The increase in threshold seems to align itself with the exemption which was applicable under the central excise regime. The increase in the threshold to Rs 1.5 crore is a welcome relief for small traders/ manufacturers who would now have a simple compliance – this move should not result in significant revenue loss to the Government, as the dealers opting for the composition scheme would have to forgo the input tax credit available. In fact, given the credit chain break, quite a few suppliers now eligible for the composition may not necessarily opt for it”.
Also Read: What is GST Composition Scheme?
Adhia added that there will be a uniform rate.
– 1% ( 0.5% Central tax plus 0.5% State tax) on composition scheme for dealers and manufacturers.
– 5% (2.5% Central tax plus 2.5% SGST) for the Restaurant Services on the turnover and this remains unchanged.
This scheme is an alternative method for small taxpayers whose turn over is up to Rs. 1.5 crore and pays the flat rate of tax regardless what they produce and provide as goods or service. Also it optional for the eligible person to pay tax under this scheme can pay tax every quarter instead of paying tax at the normal rate.