Modi, under fire, eases burden on small companies

Javier Stokes
October 8, 2017

"Small businesses will also have to file monthly returns for three months - July, August and September - and the switchover to quarterly filing will happen from the cycle starting October 1", Jaitley added.

Moreover, the government had earlier mandated reverse charge mechanism, under which large entities pay taxes on behalf of their supplies from unregistered SMEs.

Speaking to media persons after the meeting, Jaitley said food packets used in the ICDS scheme, plastic and rubber wastes will now be taxed at the rate of 5 per cent instead of 18 per cent. "He said that the roll out of e-way bill, another issue that has been under consideration for a long time, has been deferred to March 31, 2018.The experience of Karnataka where it is in place has been encouraging", said Jaitley.

Exporters body FIEO's President Ganesh Kumar Gupta said that these initiatives will address the problem of the exporters particularly micro and small segments.

The SME sector has been grappling with working capital issues due to the monthly return filing rule under the GST regime, which requires them to pay taxes upfront and claim a refund later.

Merchant exporters will be able to avail of exemption under advance-authorisation, EPCG and 100% EOU schemes till the end of this financial year. Shiv Pratap Shukla urged people to give the government nine months to remove all glitches in the GST system.

It also raised the turnover threshold from Rs 75 lakh to Rs 1 crore for businesses to avail of the composition scheme that allows them to pay 1-5% tax without going through tedious formalities of filing detailed returns.

The composition scheme, meant to ease compliance for small units, will be extended to businesses with a turnover of up to ₹1 crore a year from the previous limit of ₹75 lakh.

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The reduction came as part of a slew of measures announced by finance minister Arun Jaitley to bring relief to traders and small businesses.

The Council also chose to cut GST rate on 27 common use items.

The GST council slashed the rates on 27 items of common consumption, including roti, khakra, namkeen, stationery, man-made yarn, with a lot of them being brought under the 5% category.

Exporters will start getting refunds of their input credit for the month of July from 10th of October, and for August from 18th of this month. The government is planning to roll out a system of e-wallets that would ease the input tax credit refund process. "Proposal of an e-wallet mechanism from April 2018 seems to be interesting but would entail significant IT changes".

On the occasion, Revenue secretary Hasmukh Adhia said that 90 percent of the taxpayers will file quarterly returns and pay tax every three months as well.

"The GST Council has already taken pro-active measures in rationalizing GST rates in the recent past and the trend would continue in future wherever the taxation is deemed to be slightly on the higher side".

Services providers providing inter-state services up to Rs 20 lakh will be exempted from GST. Service providers can not, however, opt for the composition scheme.

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