The GST Council relaxed tax exemption limit to Rs 40 lakh from Rs 20 lakh during its 32nd meeting held earlier this week.
The panel also decided to extend the composition scheme to traders from informal sector rendering services or mixed supplies with a turnover up to Rs 50 lakh.
Union Finance Minister Arun Jaitley while briefing the media after the Thursday’s meet said the threshold limit has been doubled to Rs 40 lakh. The exemption limit for small states has also been increased to Rs 20 lakh from Rs 10 lakh.
“The states will have the discretion to opt up or opt down the exemption limit. They will have to inform the Secretariat within a week if they wish changes in their exemption limit,” he added.
The exemption limit is the threshold of annual turnover above which companies have to mandatorily register under the GST regime.
Regarding exemption limit, a dual threshold system is maintained, a lower cap for North-eastern and hilly states flagged as special category states and a higher one for the rest of India.
The GST Council also decided that service providers and those who render mixed supplies of goods and services with a turnover up to Rs 50 lakh in the informal sector will be entitled to the composition scheme under the GST regime.
The composition rate for service providers in the informal sector has been pegged at 6 percent. “This 6 percent is lower than the service tax paid by service providers with turnover up to Rs 50 lakh,” the minister said.
In its previous meeting, the GST Council had slashed tax rates on seven items previously placed in the highest tax slab. Rationalising the 28 per cent tax slab, the council had pruned the GST rates on six items to 18 per cent slab and one item to five per cent slab. In total, the panel had reduced rates on 23 goods and services.