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'Increased threshold of GST's Composition scheme to benefit SMEs'
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SME Times News Bureau | 12 Jun, 2017
Industry and other stakeholders on Sunday hailed the Goods and Services
Tax (GST) Council's move of bringing traders, manufacturers and
restaurants below Rs 75 lakh turnover under the Composition Scheme,
saying that it will boost small and medium enterprises (SMEs) in the country.
"This
is a big decision in favour of traders. Its a people-centric decision,
will benefit the common people. The biggest win is for SMEs today.
Biggest development for small and medium enterprises (SMEs) and small
businesses that contribute on a large scale to the GDP and job sector of
the country," West Bengal Finance Minister Amit Mitra told reporters
in New delhi after the 16th GST Council meeting in New Delhi.
"The purpose of GST
is to protect SMEs, protect states' revenues and benefit people. By
stimulating SMEs, which are labour intensive, taxes will go up, impact
on GDP will go up and if implemented in appropriate manner, it can lead
to greater revenues," he said.
The Council on Sunday allowed
traders, manufacturers and restaurants with turnover of up to Rs 75 lakh
to avail of the composition scheme, against Rs 50 lakh earlier.
Traders
who have below Rs 75 lakh turnover will have to pay 1 per cent tax,
manufacturers will have to pay 2 per cent while restaurant businesses
will have to pay 5 per cent if they opt to go for the Composition Scheme
under GST.
However, under it, no input tax credit will be made available.
Pratik
Jain, Partner and Leader Indirect Tax, PwC said: "Increasing the
composition scheme limit to Rs 75 lakh from Rs 50 lakh will provide
relief to many more small businesses, though service providers (except
restaurants) continue to remain outside the ambit of composition levy."
The Council on Sunday also reduced the tax rate for 66 items under GST.
"It's
really encouraging that government, in a short span of time, managed to
consider all the industry representations on rates and
reduced/realigned the rates on almost 50 per cent of the items covered
under those," Jain said.
Overall, the decisions in the Council
meeting are all positive and demonstrates a constructive dialogue
between the government, which should be a key feature of any such
reform, he said.
Mahesh Jaising, Partner, Indirect Tax, BMR and
Associates LLP said: "The GST Council has decided to increase the
threshold of the composition scheme. This should mean that a significant
number of SME sector players should benefit from not having to meet
with detailed compliances under GST and also having a less financial
burden, on account of GST."
"In terms of rates, the GST Council
has reduced the rates for 66 items. The approach seems to have been to
address cases where there was an error in the fitment exercise and also
to reduce the rate of key products used by the common man. Importantly,
the decision demonstrates the welcome approach of the GST Council in
hearing industry's issues and addressing concerns, in several cases,"
Jaising said.
Vishal Raheja, DGM, Taxmann R&D said: "One
major decision taken was raising the threshold limit for Composition
Scheme to Rs 75 lakh from Rs 50 lakh."
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