Enhancing threshold composition limit
Trade and business fraternity in the state have something to cheer about as the administration has decided to enhance threshold, composition limit under GST as proposed by the GST Council during its 32nd meeting held yesterday.
Composition scheme under the law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turn over as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law. Composition levy would be generally opted by persons who are supplying goods and services or both to the end consumer.
On the recommendation of a group of ministers constituted for this purpose- the major decisions taken in meeting were related to enhancement of threshold limit for seeking registration and raising the limit for composition scheme under the GST law.
For the benefit of small and marginal businesses, the Government of Jammu and Kashmir decided to opt the threshold for registration in respect of goods to Rs. 40 lakh despite being a special category state.
The administration also opted to raise the limit of composition to Rs 1.5 crore from current limit of Rs. 1.00 crore to benefit small traders and manufacturers who will now pay quarterly tax and have to file annual return only thereby reducing their compliance burden. These decisions are to be implemented by the Government from April 2019.
The business community will breathe easy as these measures will ease the compliance burden on the dealers simultaneously relieving the small and marginal dealers from seeking registration under GST law.
This scheme will also benefit the small traders as the proposal for composition scheme to small service providers having an annual turnover of Rs 50 lakhs is also included in the composition limit.
The GST Council also decided to introduce a free billing and accounting software for small businesses having an annual turnover of Rs 1.5 crore. This move will provide assistance and necessary support to the small and marginal traders/manufacturers in the field of accounting for better and easy compliance under the GST law.
However, the state administration needs to create an awareness among the business community about the new composition limit scheme. The scheme allows the trader or service provider to pay taxes only at a certain percentage of turnover, file periodic returns only (usually on a quarterly basis), have an option of not having to maintain detailed records or follow tax invoicing rules.
It also desists the trader from asking for any Input Tax Credit (ITC) and does not also allow them to collect tax on sales. The scheme will for a smaller businesses, make tax calculations easier which will also save his time and energy involved in maintaining detailed records.