The Goods and Services Tax (GST) in India evokes mixed responses amongst businesses and consumers alike. It has been having teething troubles since its launch on 1st July 2017. The GST Council met on 6th October to discuss challenges faced by businesses and consumers.The GST council made number of recommendations to provide relief to small businesses. In this article, we will highlight some of the key changes recommended by GST council to address the challenges of Small and medium businesses.
Quarterly Filing of GST returns
Businesses have found a tough time filing their GST returns monthly with challenges faced on both understanding of compliance rules and technical challenges on GST portal side. GST council acknowledged the challenges faced. To help small businesses, council has taken the decision of quarterly filing of GSTR 1, GSTR 2 and GSTR 3 instead of monthly filing. This benefit will be available to small businesses with turnover of Rs.1.5 crore or less
Businesses having turnover of more than Rs.1.5 crore will continue to file GSTR 1, 2 and 3 on a monthly basis. They can continue to take input tax credit on a monthly basis on supplies they are purchasing from the small businesses even if the small businesses may be filing returns on a quarterly basis.
Changes in opting for composition scheme
Earlier businesses with turnover of less than Rs. 75 lakhs could avail the composition scheme. This scheme allows businesses to pay a flat nominal percentage of their turnover as GST. The council made following changes in the composition scheme.
- Enhancement of eligibility limit from an aggregate turnover of Rs. 75 lakhs to Rs. 1 crore
- Businesses providing exempted services will also be eligible for availing composition scheme
Deferment of Reverse charges for purchases from unregistered dealer
Purchases of goods / services by registered persons from unregistered suppliers (URD purchases) were subject to reverse charge. Compliance with this rule, given that GST law is still in its early stage was very challenging. Businesses faced both knowledge issues and working capital issues as tax was to be paid on behalf of suppliers. GST council in its meeting has deferred this rule till 31st March 2018. This is a big relief for small businesses who were impacted very hard by this provision.
GST on advances
GST is required to be charged on all advances, whether they were received against supply of goods or against supply of services. This was a significant shift from the earlier VAT laws and did impact the trading community as it was hitting their working capital.
In order to provide relief to small businesses, GST council has decided that businesses with annual aggregate turnover less than Rs.1.5 crore will not be required to charge GST on advances received for goods. However, they will be required to charge GST on advances received on services.
Registration for Businesses
It was mandatory for service providers making inter-state taxable sales even if turnover was not crossing the threshold limit. However GST council has relaxed this requirement.Now, Service providers making inter-state taxable sales will not be required to register with GST if the turnover does not exceed Rs.20 lakhs annually.
Deferment of TDS/TCS rules
TDS/TCS provisions whereby GST has to be deducted at source has been defered until 31st March 2018