Relief to MSMEs! GST exemption limit doubled to Rs 40 lakh from Rs 20 lakh

Arun Jaitley said while under original GST structure, it was envisaged for those with turnover upto 20 lakh to get exemption, the threshold for some northeastern and hill states was kept at Rs 10 lakh.

The scope of the GST Composition Scheme, under which small traders and businesses pay a small tax based on turnover rather than value addition, was raised to Rs 1.5 crore from Rs 1 crore.

New Delhi: In a bid to give relief to micro, small and medium enterprises, the GST Council on Thursday doubled the exemption limit to Rs 40 lakh and raised the threshold for availing the composition scheme. During a press conference, Finance Minister Arun Jaitley told reporters that the GST Council has doubled the GST exemption limit to Rs 20 lakh for north eastern states and Rs 40 lakh for the rest of the country. In addition to this, the scope of the GST Composition Scheme, under which small traders and businesses pay a small tax based on turnover rather than value addition, was raised to Rs 1.5 crore from Rs 1 crore. The twin move would give relief to micro, small and medium enterprises (MSMEs), he said. Announcing the decisions after the GST Council meeting, Finance Minister Arun Jaitley also ruled out any further cuts in tax rates and said "reductions will be made only when revenues move up". He said while under original GST structure, it was envisaged for those with turnover upto 20 lakh to get exemption, the threshold for some northeastern and hill states was kept at Rs 10 lakh. Jaitley said "We have decided to continue with the twin structure with two slabs. While the Rs 20 lakh threshold has been doubled to Rs 40 lakh, for smaller states, the exemption has been kept at Rs 20 lakh,". Even before the decision, some states, including Jammu and Kashmir and Assam, had amended their laws to increase the Rs 10 lakh threshold to Rs 20 lakh. Jaitley said the states with the new limit of Rs 20 lakh will have the option to "opt up" and states with Rs 40 lakh limit will have the option to "opt down" over concerns of erosion of assessee base. He said while the decision would make over 20 lakh businesses eligible for exemption, all of them may not avail it in order to continue to enjoy benefits of GST like input tax credit. (agency inputs)