On 24th August 2020, the Current Finance Minister Ms. Nirmala Sitaraman in the Twitter handle of the Ministry of Finance announced the Revised GST rates, Exemptions, and relaxations for SME and General sectors. The SME sectors faced a huge financial crisis based on the GST tax rate levied on their businesses. However, based on the sector’s potential capabilities the Late ex-Finance minister Arun Jaitley previously had introduced the GST exemptions and relaxations to the SME sector to ensure financial stability.
The core aspects of previous GST exemption schemes
1. Compliance reliefs were given in the form of threshold exemptions
2. Composition levy schemes
3. Quarterly filing of the GST returns.
According to the recent analysis of the RBI shared by the finance ministry, the outcome based on the past exemption has impacted benefits of Rs 1 Lakh crore in a year based on the reductions as well as the weighted GST rate has significantly reduced.
Amidst the pandemic, with the earlier GST rates and exemptions, the SME sector had to borrow funds to sustain their business which impacted by an increase in their liability. Hence, the announcement of revised GST rates and exemptions would provide further relief for the SME sectors to ensure better working capital flow in their organization.
Revised Changes of GST Exemptions
Given below is an infographic which enlists the major changes of GST rates and exemptions
The current government is promoting the automation of GST registration processes. The CBIC – Central Board of Indirect Taxes and Customs notified that the Aadhaar – authenticated for GST registration was introduced on August 21. In case the business does not provide Aadhaar for GST registration, registration is granted after physical verification of the place of business. Due to the automation of the GST process, there are estimated 50 crore returns that have been filed online, and 131 crore E-way Bills generated in the time frame of 21st – 24th August 2020.
COVID-related GST Relaxations
1. Due dates extended for those opting for composition scheme.
2. Waiver of late FEE for filers of the statement of outward supplies in GSTR-1 if filed by specified extended deadlines.
3. All GST compliance deadlines that fell between 20th March – 30th August, 2020, extended to August 31st, 2020.
4. Mandatory requirements of filing returns and statements of outward suppliers using the digital signature are relaxed.
5. Facility for filing Nil returns and Nil statement of outward supply via SMS introduced.
With the above changes provided by the Ministry of Finance, we can expect the SME sectors to grow besides the impact of COVID which burdened the business sectors. The government is committed to strengthening the existing SME sectors by providing exemptions and reductions of GST rates to help them stabilize their business’s challenges.
We at Onsurity believe that SMEs play a substantial role in the economy with higher employment opportunities. Hence, it is our responsibility to ensure that the majority of the workforce in the SME sector is given the best group healthcare plan that benefits the employees as well as the organization.