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Initially for GST Registration under composition Scheme, the threshold limit was set at 50 lakh rupees. It means that any taxpayer registered under GST with an aggregated turnover of up to 50 lakh rupees can apply for the composition scheme.
However, after due consideration for the well being of the MSME sector, this limit is increased by the GST Council.
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Firstly, in the 16th GST Council meeting held on Sunday, 11th June 2017 Finance Minister Mr. Arun Jaitley announced that along with reduction in tax rates for 66 items, the threshold limit for the composition scheme will also be increased. It was increased from 50 lakh to 75 lakh rupees.
And later in 23rd GST Council Meet, this limit was further increased to 1.5 Crore. This move is to include more small and medium-sized businesses and traders under the composition scheme’s umbrella. This will extend its benefits to a wider base of SMEs (Small and Medium Enterprises).
In today’s economy, where initiatives like ‘Made in India’ are introduced, there is a rapid increase in SMEs. The government is providing many safeguards and subsidies on its parts to such SMEs to help them face market competition and stand on par with imports.
The composition scheme provision provided under the GST laws is a relief granted to small businesses and taxpayers. Composition taxpayers are taxed at lower rates and are required to comply with lesser compliance as compared to normal taxpayers.
Section 10 of the CGST Act, 2017 provided that every taxpayer with aggregate turnover less than 1.5 Crore rupees are eligible to apply for registration under the scheme. This threshold limit of 1.5 Crore rupees can further be increased up to 2 Crore rupees by the government at the recommendation of the council.
This decision to increase the threshold limit is widely appreciated by the general public and public officials alike. West Bengal Finance Minister Amit Misra had told reporters that “This is a big decision in favor of traders. It’s a people-centric decision and will benefit the common people. The biggest win is for SMEs today. The biggest development for small and medium enterprises (SMEs) and small businesses that contribute on a large scale to the GDP and job sector of the country,”
In a statement issued by the Finance Minister, he stated that the reason for such changes was the feedback and input they received from key industry players. This signifies a significant dialogue channel created by the ministry, which is a significant requirement for any government. Thus, the government’s decision is highly praised, as now more taxpayers are included under its ambit, and can avail the benefits of lesser compliance requirements and reduced the financial burden as the tax rates are very low under the scheme.
GST composition scheme assures improved compliance without the need for maintaining records. For any query on GST related laws, contact Enterslice.
Read our article:
Compliance Deadlines for Composition Taxpayers Relaxed
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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