Time of supply or as earlier as it was the point of taxation is a process which is used to dete...
The government has recently announced new GST rates under the GST notification number No. 2/2019-Central Tax (Rate). The notification dated 7th March 2019 introduced a new 3% GST Rate scheme for GST registered small scale businesses as well as for business units that will enroll in the financial year 2019-2020.
This scheme comes with its own set of eligibility criteria to be met by the business units. The scheme is implemented from the 1st of April 2019.
In this article, we will discuss the benefits, eligibility, and impact of this new GST scheme.
The 3% scheme for GST has various criteria for a business unit to reap benefits under the new GST rules. This scheme is applicable for business units who supply goods or services or supply both.
The following condition should be fulfilled by the business owners to get a lower GST liability:
If an existing or new business unit meets the above criteria, then they can reap the benefits mentioned under the new GST rate scheme.
However, there is another set of conditions to fulfill. The business should also fulfill the post-registration requirements to stay as a beneficiary under this scheme.
The post-enrollment criteria should also be taken in practice by the enrolled business units to enjoy the benefits of the lower GST rate.
The prescribed conditions are as follows;
In order to reap the benefits of lower GST rate, the eligible taxpayers should enroll on the GST website before 1st of May 2019 by filing GST CMP-02.
The procedure to apply under this scheme is different for GST registered business units and new GST registration.
The GST holding entity should by filing GST CMP-2 by selecting “Any other supplier eligible for composition levy” under the category of ‘registered person.‘ In addition to the above step, the taxpayer must also file FORM GST ITC03.
The new business can opt for 3% GST scheme by choosing this option during the registration process on the GST portal.
The benefits of paying GST under this scheme can be available to the already registered business units from the 1st of April 2019. New business units can get the benefits of meeting GST liability by taking benefits under this scheme from the date of registration.
The benefits of new 3% GST Scheme –
The GST council gave significant support to small scale business units operating within a single state. Such a move will reduce the tax liability of such units and increase their profitability.
The number of business units registering for GST will grow owing to reduced goods and services tax liability.
A flat 3% GST slab will reduce the compliance complexity of the eligible business units.
The economy will benefit from this move as more number of small businesses will get register and GST registered small scale business will enjoy higher profits. Thus, it is complimenting the motive of introduction of the GST bill in India.
The 3% GST Rate Scheme has provided relief to a large number of business owners. This scheme will not only encourage trade and commerce but also help in the regulation of small scale business units.
It is expected from the GST council to roll in more such schemes in the future to benefit the business owners.