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GST tweaked again | 22nd GSt council meeting outcomes

Changes in the functioning of Composition Levy

  • For taxpayers under the Composition Scheme, annual applicable aggregate turnover shall be increased to Rs. 1 crore ( this was previously Rs. 75 Lacs which was again revised from the previous Rs 50 lacs). The threshold turnover for special category states is proposed to be increased to 75 lacs (Previously 50Lacs). This revision shall be applicable to all states except Jammu & Kashmir and Uttarakhand for which the threshold limit is Rs. 1 crore.
  • This Composition Scheme shall be available to both new taxpayers and migrated ones.
  • The option of composition scheme shall be exercisable in the immediate succeeding month from the month in which the benefit of the scheme has been availed.
  • New entrants to this scheme shall have to file GSTR-4 on quarterly basis only for that portion of period in which the scheme become operational (i.e. the immediate succeeding month from the month in which scheme has been availed) and from the month immediate succeeding the quarter, the return will be filed on normal monthly basis. The last date of filing of GSTR-4 for quarter July to September 2017 has been extended to 15th November 2017.
  • For Input Service Distributor, last date of filing of Form GSTR-6 shall be extended to 15th November 2017.
  • The person who are providing exempted services along with taxable services and were in-eligible under the previous rules too can also opt for the composition scheme for taxable supplies provided by them.

Arkay & Arkay comment 

We have argued in the past that the composition levy made scant business sense for many businesses. The scheme needs to add more bells and whistles to be of relevance to the business community at large.

Relief to small taxpayers.

  • Previously, taxpayers engaged in making inter-state supplies had to register under GST even if their aggregate turnover was less than the threshold limit of Rs 20 lakhs. In a major relaxation, small tax payers are no longer needed to get registered under GST if their business turnover is less than 20 lacs (10 lacs in J&K), irrespective of the fact whether the nature of sale of goods/services whether it be intra state or inter state.
  • With effect from December 2017, small taxpayers, being businesses with turnover less than 1.5 crores will be able to file their returns on a quarterly basis. This is a major change from the earlier monthly requirement. Such businesses will still have to however file GSTR3B till December 2017 to provide information on outward and inward supplies. Persons buying from such small businesses will continue to be able to take input credit on a monthly basis as usual.
  • Small businesses have also been exempted from payment of GST on advances received on account of supply of goods. The liability for the same will arise only at the time of supply of goods. This facility is not available for suppliers of services for some inexplicable reason.
  • Modalities in the act requiring payment of GST under reverse charge mechanism in case of purchase from unregistered dealers has now been suspended till 31.3.2018 . This was causing undue hardship and confusion in many cases. A committee of experts is expected to review these provisions and come up with suggestions in this case.
  • Services provided by GTA’s to unregistered persons are now exempted from GST. These services would have otherwise required the recipient to register and deposit taxes on reverse charge basis, this incongruity has been removed with this measure.
  • Registration and operationalization of TDS/TCS provisions has been postponed till 31.3.2018. This should help ecommerce companies, sellers on such ecommerce platforms and suppliers to government departments and public sector enterprises acclimatize with the new provisions. More importantly it would also provide breathing room to the department.
  • It is proposed to push back the implementation of the e-way bill system. The system is now to be introduced from 01st January 2018 and will be operationalized from 01st April 2018.

Arkay & Arkay comments

These changes are very useful in terms of reducing the compliance burden on the small taxpayer. It can be argued however that a lot more needs to be done to make compliance easier. Larger businesses will have to endure the same processes as before. On the issue of advances, for some reason service providers have again been given the short end of the stick and will have to pay GST on advances as per previously accepted practices under service tax.

The suspension of reverse charge mechanism is a great step. This can perhaps be introduced later when the other bits and pieces of the GST machine are working fine.


Nazia Girdher, Ayesha Jain, Lavi Girdher Contributed to this article. 

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