Finally after the staggering 3 months of chaos in the country regarding the GST and its compliance the Finance Ministry of India has taken some of the best measures to give relief to exporters and small taxpayers in 22nd council meeting. In the latest GST council meeting dated October 6th of 2017, the council has taken big steps in support of the Indian taxpayers by reducing GST rates on certain items, by speeding up the refund procedures for exporters and relaxing the limit for composition scheme.
Let us understand what are the highlights of this meeting and how shall this affect the industry.
For Small Taxpayers
It is clear that the council has focused much on the issues faced by the small taxpayers since mostly all the practical difficulties faced during this 3 months of transition have been addressed in the meeting.
While Mr Jaitley spotted talking about the returns that have been filed in these 3 months, he was clear to mention that the small taxpayers should be given relaxation in filing monthly three returns.
With so much said about the small and medium taxpayer, one must know that though there is no concept of small and medium taxpayer but for the purpose of this article small and medium taxpayers are the persons having the annual aggregate turnover up to 1.5 Crore.
RELIEF NO. 1: NO PROVISION OF COMPULSORY REGISTRATION FOR MAKING INTER STATE SUPPLY OF SERVICES
Presently the GST Act and rules made therein provides for a compulsory registration in order to make inter-state outward supplies even if the aggregate annual turnover is below INR 20 lacs. This provision has been done away for making inter-state taxable supply of services. It has been announced that all the persons whose annual aggregate turnover is not exceeding INR 20 Lacs (INR 10 lacs in special category states except J&K) are not required to get themselves registered under GST in order to make inter-state supplies of services.
Therefore, if your turnover is up to INR 20 lacs and you are making inter state services, you are no more required to get the GST registration. This step by the ministry would significantly reduce the compliance cost for the businesses.
However this provision has remained intact for inter state supply of goods. Therefore anyone supplying goods outside the state shall have to compulsorily registered irrespective of the threshold limit of INR 20 lac.
RELIEF NO. 2: QUARTERLY RETURN FOR TAXPAYERS WITH AGGREGATE ANNUAL TURNOVER UP TO INR 1.5 CRORE
Starting from quarter 3 i.e., October onward, all such taxpayers whose annual aggregate turnover is up to INR 1.5 Crore are required to pay their taxes and file their returns only on quarterly basis. Up to now, GSTR 1, 2 and 3 were required to be filed on monthly basis by such tax payers. Also the taxes were supposed to be paid each month. After this announcement by the Ministry, small and medium taxpayers would be eligible to enjoy such relief.
This means that if you are a business whose aggregate annual turnover is up to the prescribed limit of 1.5 Cr, you may file your taxes on quarterly basis. However, this relief is only available starting from the 3rd fiscal quarter, which means for July – September, the same old concept of monthly tax payment and return filing shall prevail.
In addition to this, the Ministry also clarified that the taxpayers having Inward supplies from such small and medium businesses would be eligible to claim ITC on their bills on monthly basis. The due dates to file GSTR 1, 2 and 3 on quarterly basis are yet to be announced. Meanwhile all taxpayers required to file GSTR 3B on monthly basis up to December.
RELIEF NO. 3: NO REVERSE CHARGE ON PURCHASES FROM UNREGISTERED PERSONS
The GST Act as passed this year has brought with itself new concept regarding the Reverse Charge Mechanism on supplies consumed from the unregistered persons. With the course of time, the government also released notification no. 08/2017 dated 28/06/2017 in CGST Rates wherein purchases from unregistered buyers up to INR 5,000/- were declared exempt of GST.
It seems that the taxpayers were still not happy with such provision considering the newness of the Act and lack of awareness of the provisions to them. The government has taken care of this difficulty of taxpayers and deferred the provisions of reverse charge under section 9(4) which is on purchases from unregistered supplier up to 31/03/2018 and it should be reviewed by expert committee as per the government.
Hence, this means if you are a business registered under GST and you consume inward supplies from unregistered sellers, you are no more required to raise any invoice on your self or pay any tax under reverse charge on the same.
RELIEF NO. 4: COMPOSITION SCHEME LIMIT EXTENDED TO INR 1 CRORE
In 3 months of GST era, the government has understood one thing that the small taxpayers are not welcoming the GST as a whole. So to mitigate such differences of these small taxpayers the government has exercised its powers and further extended the limit of turnover up to which one can opt for composition scheme to INR 1 Crore.
This limit had been changed from INR 50 lacs to INR 75 lacs previously. Now this shall stand to one crore rupees.
So this means, if you were planning to get yourself registered under composition scheme (read here all about composition scheme) but you had turnover of more than seventy five lakh rupees but up to one crore rupees, you are eligible to opt for this now.
This threshold limit for special category states except J&K and Uttarakhand has been extended to INR 75 Lacs from existing 50 lacs. The facility to opt for composition scheme under increased threshold both for new as well as migrated tax payers shall remain available up to Mar 2018. A group of ministers shall be constituted to examine the composition scheme and suggest ways to make it more attractive.
RELIEF NO. 5: NO GST ON ADVANCES RECEIVED BY SMALL & MEDIUM TAXPAYERS (Aggregate turnover up to 1.5 Cr)
Though the concept of tax on advances was not new in GST as it was borrowed from the service tax regime only, but there are various procedural compliance that were added in the GST scenario on taxability of such advances. Also, advances were not taxable in trading industry therefore due to the practical problems faced by the taxpayers the issue has been dealt with by the government.
Mr Jaitley clarified that the advances will no more be subjected to GST for the taxpayers whose annual aggregate turnover is up to INR 1.5 Crore and liability would arise only at the time of supply. This condition shall remain intact for the businesses whose aggregate turnover is over the threshold limit of 1.5 cr.
This means if you are a business with annual aggregate turnover of below INR 1.5 Crore, you may receive advances and not pay any GST on the same.
RELIEF NO. 6: Goods Transport Agency (GTA) SERVICES TO UNREGISTERED EXEMPT FROM GST
In the existing situation, the services of GTA qualifies as supplies liable for reverse charge. And hence, anyone consuming such supplies is required to get himself registered under GST for the virtue of section 24(iii) of CGST Act which talks about the compulsory registration.
Now to mitigate the difficulties, the government has clarified that supplies made by GTA to the unregistered persons would be exempt from GST.
This means, if you are unregistered and you consume inward supplies of GTA, then you are not liable to get yourself registered under GST and pay GST on reverse charge.
RELIEF NO. 7: TDS / TCS PROVISIONS DEFERRED TILL MARCH 2018
Due to the lack of readiness in the industry, the government has deferred the provisions of TDS and TCS up to 31/03/2018. Read here all about TDS in GST.
RELIEF NO. 8: E-WAY BILL TO BE IMPLEMENTED IN PARTS FROM JANUARY 2018 ONWARD
The pilot project on e-way bill was implemented and tested in Karnataka and it turned out to be a success there. Taking the inputs from there the e-way bill will be implemented in rest of the country with effect from 01/04/2018. However this shall be done in parts starting from January 1st of the coming year. This is in order to give industry more time to adjust in the new scenario. Read here all about E-Way Bill.
RELIEF NO. 9: LAST DATE TO FILE RETURN BY COMPOSITION TAXABLE PERSON AND INPUT SERVICE DISTRIBUTOR EXTENDED TO 15/11/2017
The Ministry also extended the due date to file the return by the Composition Taxable Persons and Input Service Distributors to November 15, 2017.
The export industry had been shaken with the GST implementation due to the new and unique features of the act. The exporters have been continuously putting their plea in front of the Finance Ministry for ease and relaxation of the export procedures.
The government recently expanded the scope to export without payment of IGST through LUT in its notification and circular.
Now the government has assured the exporters for the ease in refund procedures. It is announced that the refund process for the month of July to be initiated as soon as on Oct 10th, whereas for the month of August would be possible only on 18th Oct.
It has also been told that for the balance year, they would operate under an exempted category paying a nominal GST @ 0.1%
REVISION IN GST RATES
Time and again the rates have been revised in GST for various items and one can expect this alteration in rates for different commodities in the coming future unless the economy is assimilated with GST. The GST rate on 27 commonly used items have been dropped down. Here are various old and new rates.
All the decisions above are taken in the GST council meeting and a press release for the same has been released by the ministry. However legal notification and circular, if any can be assumed in the near future. The industry is expected to cal down a bit with these reliefs from the government. Indian Prime Minister also tweeted about the decisions of the council meeting
Hope the information will assist you in your Business & Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.