The 22nd GST Council in its meeting located at New Delhi on 7th October 2018, discussed about some key changes which required to ease the burden of consent on small and medium enterprises. The difficulties in filing the return, inconveniences faced on account of paying tax on RCM and advance receipts and proposals received from various trade associations to lower the speed of Goods & Service Tax on certain products/services, there are few important issues which were discussed and accordingly the recommendations are made by GST council meeting.

The following are the GST Council’s decisions:

GST returns

The small and medium enterprises with yearly aggregate turnover up to Rs. 1.5 crores, are required to file quarterly returns in FORM GSTR-1, GSTR-2 & GSTR-3 and pay taxes only on a quarterly basis. This a large relief to SMEs, who otherwise were required to file and pay the tax on a monthly basis.

The quarterly returns are applicable from the third quarter of this fiscal year i.e. October-December, 2017. This implies that for July, August and September, 2017, all the companies (including the company with turnover up to 1.6 crores) will have to file GSTR-1, GSTR-2, and GSTR-3 on monthly basis. Also, the plan GSTR-3B must be filed until December, 2017 regardless of the very fact that little and medium business are required to file quarterly return from October onwards.

The due dates for filing quarterly return and therefore the August, 2017 return are notified shortly. To know the due dates of Goods & Service Tax returns for July, 2017, please read our blog GST Return Dates: For August and September, 2017

With small and medium businesses being allowed to file the quarterly return, now the question arises as to how businesses with turnover of more than Rs 1.5 crores buying from such small taxpayers avail ITC? This is because, businesses with turnover of more than Rs 1.5 crores are required to file the GST returns on a monthly basis.

No worries, these businesses would be eligible to avail ITC on a monthly basis supported their self-assessed FORM GSTR-2.

No mandatory registration for inter-state supplies

Businesses making inter-State taxable supplies were compulsorily required to register (except for paperwork services), regardless of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is lesser than Rs. 20 lacs (Rs. 10 lacs in special category States apart from J & K) from obtaining registration although they’re making inter-State taxable supplies of services.

This means, you can create an inter-state outward supply of services even without doing the registration, if your aggregate turnover does not exceed Rs 20 lacs. This will significantly reduce the compliance cost of small service providers and also, the advantage of threshold limit for registration, which was thus far available just for businesses supplying within the State, is now extended for inter-State service providers also .

GST on RCM is postponed

If the inbound supplies received from the unregistered dealer (URD) where the mixing up from all unregistered suppliers, was quite Rs 6,000 during a day, the recipient of such inbound supplies was susceptible to pay tax on reverse charge. This provision is suspended till 31st March, 2018. This means, till such time, the recipient isn’t required to pay the tax in such supplies on reverse charge basis. This will benefit small businesses and substantially reduce compliance costs and efforts in accounting and reporting these details reciprocally .

Please note, RCM susceptible to be paid on notified goods and services like GTA, imports, sponsorship etc. will continue and therefore the recipient is required to pay tax for such supplies.

GST on advance receipt

On receipt of advances, GST needs to be paid by the supplier. This was almost like the supply which existed within the earlier service tax regime. So, service providers were simple with the concept of paying direct tax on the advance receipt but for traders and manufacturers, this was totally a new concept. On the other side, it impacted the cash outflow, especially for small traders and manufacturers.

In order to mitigate inconvenience and reduce the burden on the little businesses, it’s been decided that the companies having annual aggregate turnover up to Rs. 1.5 crores aren’t required to pay GST at the time of receipt of advances on account of supply of products . The GST on such supplies shall be payable only the availability of products is formed .

Please note, this alteration is applicable just for advance received against the availability of products . On the receipt of advance against services, the prevailing provisions will continue with none changes.

Composition scheme threshold limit increased

The threshold limit of companies choosing configuration scheme is increased from 55 Lakhs to 80 lakhs for special category states (Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Arunachal Pradesh, Assam and Manipur,). For rest of India, it is increased from Rs 75 Lakhs to 1 crore. The increase within the turnover threshold means greater number of taxpayers can avail the advantages of easier compliance under the composition scheme and it’s expected to profit the MSME sector.

Also, one among the conditions to choose the composition scheme was, that the taxable person shouldn’t be engaged in supply of exempt supplies. This plan is relaxed such even though the taxable people is engaged in supply of exempt supplies and meets all other eligibility conditions as needed , here are going to be allowed to opt for composition scheme.

Due date to opt composition scheme extended

The facility of availing configuration under the increased threshold (discussed above) it should be available to both migrated and new taxpayers up to 31st March, 2018. The option once opted will become operational from the primary day of the month immediately succeeding the month during which the choice to avail the composition scheme is exercised. For example, if composition scheme is opted on 15th November, 2017, it’ll be operational from 1st December, 2017.

The return in FORM GSTR-4 must be filed just for that portion of the quarter from when the scheme becomes operational and for preceding tax period, the returns as applicable for a normal taxpayer needs to be filed.

GTA to an unregistered person is exempted from Goods & Service Tax

Goods Transport Agencies (GTAs) weren’t willing to supply services to unregistered persons (not specified as recipients susceptible to pay tax on reverse charge) citing that they’ll need to register and charge tax on a forward charge basis.

In order to clear the difficulty being faced by small unregistered enterprises on this account, the services provided by a GTA to an unregistered people is exempted from Goods & Service Tax.

TDS and TCS postponed

The registration and ope rationalization of tax deducted at source (TDS) and tax collected at source (TCS) is suspended until 31st March, 2018.

E-way bill applicable from 1st April, 2018

The e-way bill system shall be introduced during a staggered manner with effect from 1st January, 2018 and can be unrolled nationwide with effect from 1st April, 2018. This is so as to offer trade and industry longer to familiarise with the GST regime.

Due date to File GSTR-4 and GSTR-6 extended

The due date for filing the GST return in FORM GSTR-4 by the configuration dealer for the quarter ended July-September, 2017 is extended to 16th November, 2018. Also, the last date for filing the return in FORM GSTR-5 by an Input Service Distributor (ISD) for the months of July, August and September, 2018 is extended to 16th November, 2018.

GST rates revised for certain goods and services

The rate for about 27 items are lowered and these include plastic waste, parings or scrap, e-Waste then on. Click here to download the entire list of revised GST rates on goods. Apart from goods, GST rates on paperwork services are being revised. Click here to upload the revised Goods & Service Tax rates on services.

Conclusion

The outcome of the 22nd GST council’s meeting may be a clear indicator that the govt has swiftly acted on the concerns raised by tax payers and trade bodies, which clearly underlines the intention of the govt to streamline GST implementation and administration quicker. The reduction of compliance burden for little and medium businesses was a key focus. We expect, that the key changes made by GST council like quarterly returns for little businesses, relaxing the provisions on GST on advances, allowing the tiny businesses to make interstate supplies of Services and so on, will aid SMEs in neutralizing the cost of consent and saving ample time towards meeting the compliance requirements.

Credits: Tally Solutions

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