The GST Council on Friday raised the threshold turnover for the composition scheme that allows SMEs to pay 1-5 per cent tax, without going through cumbersome formalities. The composite scheme for small businesses, which was applicable for turnover upto Rs 75 lakh has now been extended for gross turnover upto Rs 100 lakh.
Further, businesses with turnover upto Rs 150 lakh have now been allowed to file returns and pay GST on a quarterly basis, instead of a monthly basis.
“The measures will have a positive impact in these three different ways,” SMERA, a joint initiative of SIDBI, D&B and leading public and private sector banks in India, said in a release here.
It listed the benefits of the GST relief as: “Simplification of tax structure and minimisation of compliance costs for small businesses; evolution of an alternative GST mechanism for exports to ensure that SME exporters don’t face liquidity or working capital pressures, and revision of tax rates for some unbranded common products to improve the competitiveness of those MSMEs who manufacture and distribute them.”
Sankar Chakraborti, CEO of SMERA Ratings said: “This implies that the compliance burden and its costs for small entrepreneurs and enterprises would reduce significantly. Such a simplification of the taxation structure for small businesses will also lead to an increase in the taxpayers’ base and improve compliance.”
Taking stock of the exporters’ working capital that was getting blocked under GST affecting their cash liquidity, the Council also decided last week to disburse their refunds through cheques for July and August from October 10 and October 18 onwards respectively.
A new electronic system of e-wallet is being created for exporters, which will be implemented from April 1, 2018. The exporters will receive some notional credit in their e-wallet as advance. They will pay their tax and the refund will get offset within the wallet. A technology company will be allotted the task to develop e-wallets for exporters.
Till then, exporters will have to pay nominal GST of 0.1 per cent for procuring goods from domestic suppliers for export.