In its meet at Guwahati, the GST Council has once again tweaked the threshold limit per se composition scheme to Rs. 1.5 crore for small taxpayers. Simultaneously it also made the call to amend the legal framework for increasing the threshold to Rs. 2 crore.
Know in detail about the composition scheme under the new GST regime, here.
In the last month's GST Council meet, the threshold limit was revised from the original Rs. 75 lakh limit to Rs. 1 crore. The composition scheme under the GST allows small businesses with a turnover of upto Rs. 1.5 crore to pay tax at a flat rate based on their turnover irrespective of their line of business or services they provide. So, instead of paying taxes at normal rates, eligible individual applying for the scheme can pay tax at the specified rates on a quarterly basis.
It should be remembered that small traders and manufacturers opting for the composition scheme are not allowed the provision of claiming input tax credit. So the increase in the threshold to the new Rs. 1.5 crore is expected not to result in significant revenue loss to the exchequer.
Adhia said that a uniform rate of 1% of the turnover; 0.5% central and 0.5% state tax shall be levied on traders and manufacturers under the composition scheme. No changes have been brought about in respect of restaurant services that are charged uniform 5% rates under the scheme.