Steps for benefit of MSME Sector under GST

With an intention to improve the MSME sector, GST Council has taken various decisions in various meetings. In this article, we will discuss such major decisions.

The following are the major decisions taken for the benefit of the MSME Sector.

• Goods which are manufactured and or used in major portion by the unorganized MSME sector have been kept at lower rates or are exempted. For example,
  1. electrical switches and wires, plastic products, pipeline, etc. which are largely produced by MSME sector and they earlier did not pay Central Excise duty and therefore tax rate on these have been brought down from 28% to 18%. 
  2. In similar to the above, the GST rate on jute and coir like handbags, ropes, etc., which are mainly made in the cottage sector, have been reduced from 12 to 5%. 
  3. GST rates on Fishing hooks which are predominately used by the fisherman (the industry which is largely labor-intensive) have been reduced from 12 to 5%. 
• For the purpose of opting for composition, scheme turnover shall be raised from 1  Crore to 1.5 Crore. 
• Composition dealers are now allowed to supply services. Service providers with annual turnover up to 50 Lakh may opt for composition scheme and the rate of GST applicable for such supplies would be 6%.
• On the recommendations of the GST council, GST shall be levied on reverse charge mechanism on receipt of supplies from unregistered suppliers only on specified goods in case of certain notified classes of registered persons. 
• In case of failure to pay the due amount by the recipient to the supplier within 180 days from the date of the invoice issue, the input tax credit availed by the recipient has to be reversed.
• The filing of Nil returns has been simplified with the one-step process.
• Service providers making inter-State supplies, including supplies made through e-commerce operators, whose aggregate annual turnover does not exceed Rs.20 Lakh have been exempted from the requirement of registration under GST.
• Extending the Advance Authorization (AA) or Export Promotion Capital Goods (EPCG) or 100% Export Oriented Units (EOU) schemes to sourcing inputs etc. from abroad as well as domestically. Holders of AA or EPCG and EOUs are not required to pay IGST, Cess, etc. on imports. In addition, domestic supplies to holders of AA or EPCG and EOUs are treated as deemed exports under section 147 of CGST/SGST Act and refund of tax paid on such supplies shall be provided to either the supplier or the recipient vide Notification No. 48/2017-Central Tax dated 18.10.2017.
• The supply of taxable goods by a registered supplier to a merchant exporter for exports shall attract a total GST rate of 0.1% thereby reducing working capital blockage for exporters. This provision shall be made applicable with effect vide Notification No. 40/2017-Central Tax (Rate) dated 23.10.2017.
• Registered persons making a supply of goods are required to make payment of tax at the time of the issuance of invoice and not at the time when advances are received. This has been made applicable vide issuance of Notification No. 66/2017 – Central Tax dated 15th November 2017.
• The GST Council, in its 23rd meeting held on 10.11.2017, reduced the amount of late fee payable for delayed filing of return in Form GSTR-3B from Rs.200 per day for delayed filing. vide Notification no. 64/2017 – Central Tax 15th November, 2017, a taxpayer whose tax liability for the month is ‘Nil’, is liable to pay late fee of Rs.20/- per day (Rs. 10/- per day each under CGST & SGST Acts) subject to maximum of Rs.5000/- each under Act from October, 2017 onwards. In all other cases, the amount of late fee payable for delayed filing of return in Form GSTR-3B by other taxpayers has been reduced to Rs.50/- per day (Rs.25/- per day each under CGST & SGST Acts) subject to maximum Rs.5000/- each under Act from October 2017.
• The uniform rate of tax @1% (0.5% under the CGST Act and 0.5% under the respective SGST Act) is payable under the composition scheme for manufacturers and traders with effect from 01st January 2018. This has been implemented vide issuance of Notification No.1/2018- Central Tax dated 1st January 2018.

• A person eligible for composition scheme also engaged in the supply of exempt services including services by way of extending deposits, loans or advances in so far as the consideration is represented as interest or discount, will not be ineligible for the composition scheme. Further, for computing the aggregate turnover for eligibility for the scheme, the turnover of exempted services, including services by way of extending deposits, loans or advances in so far as the consideration is represented in the nature of interest or discount, supplied by a taxpayer will not be included. This has been made applicable vide issuance of Order No. 01/2017-Central Tax dated 13.10.2017.
• The GST Council, in its 25th meeting held on 18.01.2018, allowed taxable persons who have obtained voluntary registration to apply for cancellation of registration even before the expiry of one year from the effective date of registration.