Eighteen states and two UTs have exercised an option to revise the annual threshold limit.
All states except Kerala and Telangana, and two Union Territories (with assemblies), will have higher annual threshold limits for mandatory registration for GST for goods suppliers. This will come into effect from April 1, according to a report in thehindubusinessline.com. However, there will be no change in the limit for service providers, the report says.
18 states and two UTs have exercised an option to revise the annual threshold limit. For nine States, the option was deemed to have been exercised, according to information available with the Finance Ministry.
Earlier, two UTs and all the 29 states were asked to select their option — whether to raise the limit or maintain status quo. This was a one-time exercise mainly to benefit micro, small and medium enterprises (MSMEs).
In a meeting on January 10, the GST Council had decided to institute two threshold limits for goods suppliers — ₹40 lakh (for the bigger States apart from Himachal Pradesh, Assam and J&K) and ₹20 lakh (for the seven North Eastern States apart from Uttarakhand and Puducherry). Currently, ₹20 lakh and ₹10 lakh, respectively are the limits.
In the meeting, the council also decided to give States a week to decide on one of the two limits.
There is no change in the threshold for registration for service providers which would continue to be ₹20 lakh, and in the case of Special Category States, ₹10 lakh.
The report quoted a senior Finance Ministry official as saying that Kerala government had said it would keep the threshold limit at ₹20 lakh, but later said it was still under consideration. “No further communication was received from them,” the official said. The Telangana government also opted to maintain status quo “till a decision is taken by the Chief Minister”.
Another Finance Ministry official however said that the States have time till March 31 to freeze their option and inform the Centre about it, the report said.
Experts, however, apprehend that the new limit may bring in some complications. They feel that small businesses would likely require expert advise on whether to avail this exemption limit or continue to be in the GST regime. Notably, the limit is not applicable for businesses selling goods inter-State.
The report quoted Harpreet Singh, Partner at KPMG as saying that variable limits across States goes against the very idea of having ‘one nation one tax’. “States not accepting the increased threshold seem to be in fear of loss of revenue. A proper analysis may allay such fears,” he said.