Micro, Small and Medium Enterprises (MSMEs), with an annual turnover under Rs 40 lakh, will now be exempt from GST after the GST Council on Thursday doubled the exemption limit for MSMEs, reports Moneycontrol. The limit for GST registration was raised from Rs 20 lakh to Rs 40 lakh.
The council met amid expectations of rate cuts on products like cement, bringing under-construction residential properties in the five percent slab and raising the threshold limit for MSMEs.
The council also raised annual composition limit to Rs 1.5 crore from Rs 1 crore, effective April 1, 2019. The composition scheme is now a method of taxation that allows small businesses with annual turnover of up to Rs 1.5 crore (earlier Rs 1 crore) to pay tax at concessional rates and reduce compliance costs.
Minister of Finance and Corporate Affairs, Arun Jaitley, who led the meet, said that under the GST regime, service taxpayers with earnings of up to Rs 50 lakh per annum will be taxed at 6 percent, and there will be only one tax return for entities who opt for composition scheme.
The council was set to examine the report on MSMEs submitted by the group of ministers (GoM) headed by Minister of State Shiv Pratap Shukla. The report contained the proposal to increase the threshold for MSMEs.
During the meet, Jaitley said that a committee had been set up to consider the GST rates in the real estate sector. In the previous meeting on December 22, Jaitley had said that based on the report of the fitment and law committee, the council will decide on GST rate of residential properties, with a provision for claiming an input tax credit (ITC).