GST Council eases compliance burden for small and medium businesses

The GST Council at its 22nd meeting, held in the national capital on Friday, recommended changes in the composition scheme to ease the burden of compliance on small and medium businesses.

The meeting held under the chairmanship of union minister of finance and corporate affairs, Arun Jaitley, has recommended that the composition scheme be made available to taxpayers having annual aggregate turnover of up to Rs1 crore, against the current turnover threshold of Rs75 lakhs.

The threshold of turnover for special category states, except Jammu and Kashmir and Uttarakhand, shall be increased to Rs75 lakhs from Rs50 lakhs. The turnover threshold for Jammu and Kashmir and Uttarakhand shall be Rs1 crore. The facility of availing composition under the increased threshold will be available to both migrated and new taxpayers up to 31 March 2018.

The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme will have to file the return in Form GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period.

The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.

Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme.

It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.

The GST Council proposed the setting up of a Group of Ministers (GoM) to examine measures to make the composition scheme more attractive.

Relief for small and medium enterprises
At present, anyone making inter-state taxable supplies, except inter-state job worker, is compulsorily required to register, irrespective of turnover.  It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs20 lakhs (Rs10 lakhs in special category states except J & K) from obtaining registration even if they are making inter-state taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.

To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs1.5 crore, it has been decided that such taxpayers shall be required to file quarterly returns in Form GSTR-1,2 and 3 and pay taxes only on a quarterly basis, starting from the third quarter of this financial year, ie, October-December 2017.

The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course.

Meanwhile, all taxpayers will be required to file Form GSTR-3B on a monthly basis till December 2017. All taxpayers are also required to file Form GSTR-1, 2 and 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July 2017 have already been announced. The due dates for the months of August and September 2017 will be announced in due course.

The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31 March 2018 and will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs.

The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs1.5 crore shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.

Since many of the goods transport agencies (GTAs) are not willing to provide services to unregistered persons, it has been decided that the services provided by a GTA to an unregistered person will be exempted from GST so as to remove the hardship being faced by small unregistered businesses on this account.

Other facilitation measures
After assessing the readiness of the trade, industry and government departments, it has been decided that registration and operationalisation of TDS / TCS provisions shall be postponed till 31 March 2018.

The e-way bill system will be introduced in a staggered manner with effect from 1 January 2018 and shall be rolled out nationwide with effect from 1 April 2018. This is in order to give trade and industry more time to acclimatise itself with the GST regime.

The last date for filing the return in Form GSTR-4 by a taxpayer under composition scheme for the quarter July-September 2017 shall be extended to 15 November 2017. Also, the last date for filing the return in Form GSTR-6 by an input service distributor for the months of July, August and September 2017 shall be extended to 15 November .2017.