In a bid to provide relief to small taxpayers, especially micro, small and medium enterprises (MSMEs), the Goods and Services Tax (GST) Council Thursday decided to double the exemption threshold to Rs 40 lakh and hike the limit for composition scheme to Rs 1.5 crore from Rs 1 crore with effect from April 1. The threshold will be Rs 20 lakh for “some hilly/northeastern states”.
In its 32nd meeting, the Council also provided relaxation to composition scheme registrants to pay taxes quarterly and file a single annual return, along with extending the scheme to service providers and suppliers of goods and services up to a turnover of Rs 50 lakh with tax rate of six per cent.
States will have the option to choose between the two exemption thresholds — Rs 20 lakh and Rs 40 lakh — within a week’s time. With the hike in exemption threshold to Rs 40 lakh, about 20.64 lakh taxpayers, including composition scheme registrants, will have the option to move out of GST regime.