The GST council, in its latest meeting, has announced a range of changes, addressing many concerns with the GST regime.
What are the highlights?
Composition Scheme - Firms under the composition scheme can pay tax at a low 1-2% and file 4 returns a year unlike the regular 18% and 37 returns a year.
The threshold of annual aggregate turnover under the composition scheme has now been raised from Rs. 75 lacs to Rs. 1 crore.
The increase in the turnover threshold will make more taxpayers to avail the benefit of easier compliance under the scheme.
Inter-stateSupply - The earlier mandatory registration for inter-state taxable supplies, irrespective of turnover, is now relaxed if the annual aggregate turnover is less than Rs. 20 lacs.
The relaxation is expected to significantly reduce the compliance cost of small service providers doing inter-state trade.
Filing Returns - Small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores are now required to file returns and pay taxes only on a quarterly basis.
For those with turnover above Rs 1.5 crore, the existing system will continue of three returns per month and so on.
The registered buyers from such small taxpayers would be eligible to avail ITC (Input Tax Credit) on a monthly basis.
This is expected to facilitate the ease of payment and return filing.
Reverse Charge Mechanism - This basically means that GST is to be paid and deposited with the government by the recipient and not by the supplier of goods and services.
This mechanism has now been suspended by the GST council until 31st March, 2018.
It will be reviewed by a committee of experts and decided further.
GST on advance - The requirement of GST on advance payments received has been relaxed for annual aggregate turnovers of up to Rs. 1.5 crores.
The GST on such supplies shall be payable only when the supply of goods is made, even if the advance is received before the issue of invoice.
Unregistered Business - It was found that the Goods Transport Agencies hesitated to provide services to unregistered persons, after GST regime.
Responding to this, the services provided by Goods Transport Agencies to small unregistered businesses have now been exempted from GST.
E-way bill - The complicated e-way bill system is now said to be introduced in gradually with effect from 01.01.2018
The nationwide role out is said to be carried on with effect from 01.04.2018.
This is to give trade and industry more time to accustom themselves to the GST regime.
Export - The Council decided to continue with two pre-GST era schemes that allow duty-free sourcing of materials for export production till March 2018.
There is also an announcement on e-wallet for exporters, under which they will be given a notional amount as advance refund.
On the basis of this credit, firms can pay IGST and GST, and refunds will be offset against this.
The Council has also decided to clear all tax refund claims of exporters earlier than the prior plan.
Other measures - There are changes in tax rates, mostly a reduction, for nearly 25 items.
The registration and operationalization of TDS/TCS provisions are postponed till 31st March, 2018.
This is decided after assessing the readiness of the trade, industry and government departments.
Invoice Rules have been modified to provide relief to certain classes of registered persons.
Also, the last date for filing the return by taxpayers under composition scheme for recent months has been extended.
Further, a Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.
What are the benefits?
The changes have come as a relief to small and medium businesses (SMEs) on filing and payment of taxes.
The overall compliance burden for SMEs has been reduced.
The changes on the export front will improve the liquidity of exporters by preventing their working capital from getting locked up in tax procedures.
The changes seem to be simplifying the tax regime in many ways and encouraging fast adoption and access of GST among the trading community.
