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A few hours back, the first GST Council meeting of the new year went underway at New Delhi under the chairmanship of Finance Minister Mr. Arun Jaitley. Presenting to you in our blog today, the key updates and notifications from the 32nd GST Council Meeting –
The most significant decision of the 32nd GST council meeting was to increase the GST exemption threshold from the earlier cap of INR 20 lakh to INR 40 lakh. Similarly, the exemption limit for the Special Category States has also been extended from INR 10 lakh to INR 20 lakh.
However, the GST Council also stated, that the states will have the discretion to opt up or opt down the GST exemption limit i.e. choose between 2 options - INR 20 lakh or INR 40 lakh. They will need to inform the Secretariat within a week of the meeting, in case they wish to change the exemption limit for their respective states.
The threshold limit for service providers would continue to be INR 20 lakh and INR 10 lakh in case of Special
As per what we had predicted, a decision was taken at the 32nd GST Council meeting to extend the composition scheme to service producers belonging to the informal sector with a turnover of up to INR 50 lakhs. All service providers opting for this scheme will be liable to pay GST at a flat rate of 6%.
The GST Council decided to increase the limit of annual turnover for composition scheme to INR 1.5 crore effective from 1st April 2019. However, special category states will need to decide, within one week, about the composition limit in their respective States.
Most significantly, at the 32nd GST Council meeting, it was also decided to allow composition tax payers to pay GST on a quarterly basis, but file returns annually.
The 32nd GST Council meeting issued a directive allowing Kerala to levy a cess to cope with the natural calamities caused due to floods last year. Kerala will now be able to impose a cess of 1% on the intra-state sale of goods and services, for a maximum of two years. This was done in accordance to a special provision in the GST Act, which allows the GST Council to permit a cess for coping with natural calamities.
Contrary to expectations, the two big ticket items which did not see a decision today were GST on real estate and uniformity of taxation applicable on lotteries. The reason, as per sources, was the emergence of diverse opinions on these matters, which is why two ministerial panels have been formed to take a more detailed look at these items, before they can be taken up by the GST Council in the next meeting.
Needless to say, the extension of the GST threshold limit, is bound to provide a huge relief to many small businesses across the nation. However, developers and real estate buyers will be waiting for the next GST Council meeting for a final decision on the GST rates applicable to real estate – and that remains to be seen.