GST Exemption Limit Increased to Rs 40 lakh (Composition limit 1.5 Cr)

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GST Exemption Limit Increased to Rs 40 lakh (Composition limit 1.5 Cr). GST Council has given relief to small businessmen. On Thursday, the council decided to increase the annual turnover limit from 20 lakh to 40 lakh rupees for exemption from GST registration.

GST Exemption Limit Increased to Rs 40 lakh

GST Council in the 32nd meeting held on 10th January, 2019 at New Delhi took following decisions to give relief to MSME (including small traders), and took following other decisions-

  • The exemption limit for GST is now Rs 40 lakh and the composition scheme limit of Rs 1.5 crore.
  • GST council decided to increase the limit while giving relief to small businessmen
  • Under the composition scheme, the traders will be able to fill the returns once in a year but the tax will be deposited every quarter.

1. Threshold limit increased to 40 Lakhs

Effective From April 1, 2019 the GST exemption threshold has been raised from Rs 20 lakh to Rs 40 lakh. For hilly states and those in the North East, the threshold has been doubled to Rs 20 lakh.

There would be two threshold limits for exemption from registration and payment of GST for the suppliers of goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have the discretion to decide and inform the Secretariat about one of the limits within a week’s time

(Threshold Limit for Registration for Suppliers of Ice cream and other edible ice, whether or not containing cocoa; Pan masala; Tobacco and manufactured tobacco substitutes)

Rs. 10 LacsRs. 20 Lacs
  • 1. Manipur
  • 2. Mizoram
  • 3. Nagaland
  • 4. Tripura
Remaining States and Union Territories.

Threshold Limit for Registration for Suppliers of other Goods

Rs. 10 LacsRs. 20 LacsRs. 40 Lacs
  • 1. Manipur
  • 2. Mizoram
  • 3. Nagaland
  • 4. Tripura
  • 1. Arunachal Pradesh
  • 2. Meghalaya
  • 3. Puducherry
  • 4. Sikkim
  • 5. Telangana
  • 6. Uttarakhand
Remaining States and Union Territories.

Threshold Limit for Registration for Suppliers of Services

Rs. 10 LacsRs. 20 Lacs
  • 1. Manipur
  • 2. Mizoram
  • 3. Nagaland
  • 4. Tripura
Remaining States and Union Territories.

2. Threshold limit for services:

The threshold for registration for service providers would continue to be Rs 20 lakhs and in case of Special category States Rs 10 lakhs.

3. Power to states

Now states will be able to choose if they want to keep the GST exemption limit at Rs 20 lakh or Rs 40 lakh, Jaitley said.

4. Composition limit increased to 1.5 Cr from the present 1 cr

The existing Composition Scheme turnover threshold raised to Rs 1.5 crore. Those who use the scheme from April 1,2019

5. Quarterly payment and Annual Return

Now Composition tax payers will pay tax quarterly, but file returns annually. Taxpayers opting for Composition Scheme will be required to continue to pay tax quarterly. However, relief has been given by way of annual return filing along with a simple declaration.

6. Composition scheme for services

Those providing services or mixed supplies (goods and services) with a turnover up to Rs 50 lakhs will now be entitled to avail composition scheme. A composition scheme is being made available for suppliers of services and mixed supplies i.e. goods and services with a turnover up to Rs 50 lakhs in preceding financial year. The rate applicable for such supplies shall be 6% (3% CGST and 3% SGST).

7. Rate for services under comp scheme @ 6%

Compounding rate for services under composition scheme is fixed at 6 percent.

8. Real Estate

A committee has been set up to consider real estate GST rates, a consensus is yet to be achieved, says FM Arun Jaitley. A committee consisting of 7 ministers shall be set up to consider a composition scheme that would be aimed at giving a boost to the residential segment of the real estate. Currently, the Goods and Services Tax (GST) is levied at 12 per cent on payments made for properties under under-construction or ready-to-move-in flats where completion certificate has not been issued at the time of sale. However, GST is not levied on sale of real estate properties for which completion certificate has been issued at the time of sale.

9. Calamity cess by Kerela @1%

GST Council lets Kerala levy 1% cess for 2 years on intra-state sales: Finance Minister arun jaitley.

10. Committee for Lotteries: 

Also, a committee shall be set up to examine the tax structure that would be made applicable on lotteries.

11. Free Accounting and Billing Software: 

Small taxpayers shall be provided with a Free Accounting and Billing Software by GSTN.

Note: A notification regarding these recommendations is yet to be released.

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