Recommendations Regarding Composition Levy and GST Rate

The GST council has recently made some recommendations regarding the composition levy and GST rate. In this article we will discuss the details of these recommendations and what they mean for small and medium business owners and startup founders in India.

What is Composition Levy?

Composition levy is a scheme that allows small taxpayers to pay GST at a fixed rate of turnover without the need to maintain detailed records or file returns.

Recommendations Regarding Composition Levy

The GST council has recommended the following changes to the composition levy scheme:

The threshold limit for the scheme has been increased from Rs. 1.5 crores to Rs. 2 crores.
The rate of tax for manufacturers and traders has been reduced from 1% to 0.5%.
The rate of tax for restaurant businesses has been reduced from 5% to 2.5%.

What do these changes mean?

These changes are aimed at providing relief to small and medium business owners who were struggling to comply with the existing GST regulations. The increase in the threshold limit means that more businesses will now be eligible for the composition levy scheme. The reduction in the rate of tax will also help to reduce the tax burden on these businesses.

GST Rate Recommendations

The GST council has also recommended changes to the GST rates for various goods and services:

The GST rate on mobile phones and specified parts has been increased from 12% to 18%.
The GST rate on maintenance, repair, and overhaul services for aircraft has been reduced from 18% to 5%.
The GST rate on handmade and machine-made matchsticks has been equalized to 12%.

What do these changes mean?

The increase in the GST rate on mobile phones and specified parts is aimed at promoting domestic manufacturing and reducing the import of these goods. The reduction in the GST rate on maintenance, repair, and overhaul services for aircraft is aimed at promoting the aviation sector. The equalization of the GST rate on handmade and machine-made matchsticks is aimed at simplifying the tax structure.

Conclusion

The recommendations made by the GST council regarding the composition levy and GST rates are aimed at providing relief to small and medium business owners and promoting various sectors of the economy in India. Business owners should carefully evaluate the impact of these recommendations on their business and take appropriate action to comply with the new regulations.