GST Council meet: MSME exemption limit doubled to Rs 40 lakh, composition scheme threshold now Rs 1.5 cr The GST Council has approved the composition scheme for services and hiked annual composition limit to 1.5 crore effective from April 1

The GST Council, headed by Finance Minister Arun Jaitley, on January 10, doubled the exemption limit for GST registration for micro, small and medium enterprises (MSMEs) to Rs 40 lakh from Rs 20 lakh. This means businesses with an annual turnover under Rs 40 lakh will now be exempt from GST.

The GST Council also approved the composition scheme for services and raised annual composition limit to Rs 1.5 crore from Rs 1 crore, effective April 1. The composition scheme is an alternate method of taxation that allows small businesses with annual turnover up to Rs 1 crore (now Rs 1.5 crore) to pay tax at a concessional rate as well as reduce the compliance cost.

Under the GST regime, service taxpayers with earnings up to Rs 50 lakh per annum will be taxed at 6 percent. There will be only one tax return for entities who opt for composition scheme, Jaitley added.

The council has allowed the state of Kerala to impose a cess of up to 1 percent on intrastate sales for two years, FM Arun Jaitley said in a post-meeting media address.A committee has been set up to consider the GST rates in the real estate sector, Jaitley said. However, a consensus is yet to be achieved, he added.

The GST Council met on January 10, amid heightened expectations of rate cuts on products like cement, bringing under-construction residential properties in the 5 percent slab and raising the threshold limit for MSMEs.

In the last meeting on December 22, Jaitley had said that based on the report of the fitment and law committee, Council will decide on GST rate of residential properties, with a provision for claiming an input tax credit (ITC).

Homebuyers of real estate properties do not have to pay GST if they purchase a ready-to-move-in property after the issue of completion certificate as it considered as ‘transfer of property’ and comes under state’s jurisdiction of stamp duty. This generally makes under-construction properties costlier for the buyers.Jaitley had also said the Council will look at the report submitted by the group of ministers (GoM) headed by MoS Shiv Pratap Shukla on MSMEs. The report entailed the proposal to increase the threshold for MSMEs.

First Published on Jan 10, 2019 03:25 pm moneycontrolnews.com