The Deputy Chief Minister of Bihar, Sushil Kumar Modi, discussed regarding the proposal for raising the GST threshold. He said that this proposal is going to prove as MSME friendly and would provide relief to the particular large section of the Business society which falls under this category. He also expressed that this step would be more relevant than the Tax refunds.
The Turnover threshold Limit which is currently Rs 20 Lakh would be recommended by the Group of Finance Ministers of the States to be increased to 75 Lakh. He explained that this would be a big move and would profit Lakhs of Micro and small-scale Enterprises to get out of the GST Ambit.
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As is evident that Sushil Kumar Modi apart from being the Finance Minister of the State, has also been an active participant of GST implementation and has been a key member of GST-related panels since last two-three years. He suggested for a Composition scheme for Small service providers, just like the one for Traders and Manufacturers, and the expected Revenue limit would be between Rs 50 lakh and Rs 1 crore.
The New proposed GST threshold would neither affect the Government’s Revenue significantly nor it would reduce the GST registrants which would be 1.2 crores for the least.
The Firms having Turnover from Rs 20 Lakh to Rs 1 Crore, are just a quarter of the Total Firms registered with GSTN and their contribution to the Government’s GST Revenue is just 5 Per cent. Thus the changes would affect the Government’s Revenue minimally.
Reviews and data reveal that more than half of the firms who are registered under the GST regime are those having the turnover less than 20 Lakhs. While 20 Lakh is the lower limit for a firm to get registered to GST. Also, the point to be acknowledged is that these sub-Rs10 lakh firms contribute just 1.5 per cent of the GST revenue. The owners of these small Turnover firms prefer to be in the Tax chain in order to take the benefit of the Input tax credit by showing the large businesses as their buyers.
A Panel was formed in August, headed by Minister of State for Finance Shiv Pratap Shukla, which suggests regarding the ways which could ease the GST burden for the small-scale firms. There is one more proposal which has come through some States, and that is for refunding the MSME’s. But Modi declared it as an impractical move.
