Panel proposes fresh GST relief for small businesses

A panel of state finance ministers on Sunday suggested more relief for small business under the Goods and Services Tax (GST) that may reduce the compliance burden and sweeten the composition scheme.

Among the proposals is lowering tax rates for manufacturers and restaurants to 1 per cent. Currently, manufacturers pay GST at 2 per cent, restaurants at 5 per cent and traders at 1 per cent. Also suggested is flat 12 per cent GST for standalone restaurants and 18 per cent for eating joints located inside hotels; an increase in the annual turnover threshold for the composition scheme to Rs 1.5 crore from the revised limit of Rs 1 crore; reduction in late filing penalty as well as filing of quarterly returns for all, the Economic Times reported.

The Group of Ministers, headed by Assam finance minister Himanta Biswa Sarma, was set up to make the GST composition scheme more attractive and had its second meeting on Sunday. The next meeting is set for November 10, where a final call will be taken on the recommendations.

“The biggest recommendation has been simplification of the composition scheme by proposing to reduce the tax rate to a flat 1 per cent for all traders, manufacturers and restaurants,” one of the state finance ministers was quoted as saying by The Indian Express.

Small businesses have long complained about GST and this is the second round of relief suggested for them.