{"id":39797,"date":"2020-11-07T15:24:59","date_gmt":"2020-11-07T09:54:59","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=39797"},"modified":"2020-11-07T15:27:13","modified_gmt":"2020-11-07T09:57:13","slug":"implication-of-gst-under-msme","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/implication-of-gst-under-msme\/","title":{"rendered":"The Implication of GST under MSMEs"},"content":{"rendered":"

According to the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006, the micro, small and medium enterprise is defined in accordance with annual revenue. As classified by the union government, Micro Enterprise is a business where the annual turnover does not exceed Rs 5 Crores; Small enterprise is  an enterprise whose yearly turnover exceeds Rs 5 Crores but not exceeds more than 75 Crores and at last medium enterprise whose yearly turnover  exceeds 75 Crores and not surpasses 250 Crores.<\/p>\n\n\n\n

The MSME sector provides significant employment opportunities besides being the ground of breeding for skill development and entrepreneurship. The number of MSME<\/strong> <\/a>is more than 30 million and the number of people they employ is around 100 million.<\/p>\n\n\n\n

GST Registration under MSME<\/h2>\n\n\n\n

Every supplier, whether it is in the state or a union territory from where he makes the taxable supply on any services or goods if the supplier’s total income exceeds the prescribed amount of the exemption limit, then he will be compelled to be registered.  The threshold limit for the supply of goods is 40 lakh and the limit for the supply of services is 20 lakhs.<\/p>\n\n\n\n

Voluntarily registration under MSME<\/strong><\/p>\n\n\n\n

An individual having combined turnover below the mentioned limit may get them registered voluntarily.<\/p>\n\n\n\n

Total turnover under MSME<\/strong><\/p>\n\n\n\n

The total turnover means the total value of all the supplies which are taxable, exempt supplies, the export of services, and good and interstate supplies, of an individual having the same PAN card<\/strong>[1]<\/strong><\/a><\/sup> number.<\/p>\n\n\n\n

Individual not liable for registration under MSME<\/strong><\/p>\n\n\n\n

There are many categories of the person which are not liable for registration:<\/em><\/p>\n\n\n\n

  1. Any individual who is involved in the business of supplying only non taxable services or goods under the provisions of GST.<\/li>
  2. Any person who is an agriculturalist.<\/li>
  3. Any person who is only involved in making taxable supplies of services or goods , the aggregate tax on which is liable to be paid on the basis<\/a> of reserve charge by the beneficiary of such good.<\/li><\/ol>\n\n\n\n

    Compulsory registration under MSME<\/strong><\/p>\n\n\n\n

    There are many categories of the individual which are compulsory liable for registration:<\/em><\/p>\n\n\n\n

    1. Any person who is indulges in Intra state supply of goods which are taxable, if the total turnover is the financial years shall not exceed the exemption limit that is 40 lakhs.<\/li>
    2. Any person who is involved in the intra state supply of the services, if his total income dosed not surpass the exemption limit that is 20 lakh.<\/li><\/ol>\n\n\n\n

      Composition levy scheme under MSME<\/h2>\n\n\n\n

      The composition scheme in GST<\/strong><\/a> is a different substitute method to levy a tax on small and medium taxpayers whose total turnover is within the prescribed limits. This method of levying tax is quite a hassle-free and simple scheme for the small taxpayers. It is an optional and voluntary scheme.<\/p>\n\n\n\n

      Features of this scheme:<\/em><\/strong><\/p>\n\n\n\n

      1. A registered taxable person whose total income is does not exceed Rs. 1.5 Crore, as a goods supplier.<\/li>
      2. In the cases of supply of service only with a yearly turnover of more than 50 lakhs may opt for this composition scheme and the rate of GST which will be applicable would be 6% only.<\/li>
      3. Any tobacco manufacture, pan masala, ice cream cannot opt for this scheme of GST composition.<\/li>
      4. If a taxpayer is registered under the composition levy scheme then the taxpayer has to pay a certain amount equal to a fixed percentage as a tax to the government.<\/li><\/ol>\n\n\n\n

        The rate of tax under this composition levy scheme:<\/em><\/strong><\/p>\n\n\n\n