Giving a huge relief to small traders and taxpayers, the GST council today announced extending the threshold for composition scheme to ₹1.5 Crores. FYI, the threshold was extended to ₹1 Crore from the existing limit of ₹75 lakhs in the last GST council meeting.
Speaking to the media after the conclusion of 2 day long GST council meeting, Hasmukh Adhia, Revenue Secretary of India said that extending the composition scheme threshold is still a proposal and an amendment in the law is needed to make it a reality. He also added that after the revision, there will be a uniform tax rate for the manufacturers and traders at 1%. Earlier, the same was taxed at 2% for the manufacturers. Restaurant services will now attract 5% tax rate (2.5% state and 2.5% center).
What is composition scheme?
Composition scheme is an alternative form of tax payment for the small traders and taxpayers. According to this scheme, the traders, manufacturers or the service providers, can opt for the composition scheme and pay a 1% tax on the total turnover. This is regardless to whatever service they provide or stuff they manufacture. This is an optional scheme.
Off late, the government has been under a lot of criticism for the imposed GST regulations, especially for the small traders and manufacturers. However, this news should come as a relief to those and should hopefully help the BJP in upcoming Gujarat elections because the whole state forms a great base of traders.