26-May-2020 GST Compliances and Benefits Accorded to MSME’s Part I

The MSME’s have been accorded with various benefits under GST by the Government in terms of compliance reliefs given in the form of threshold exemptions, Composition levy schemes, Quarterly filing of the GST returns etc. which are being explained in this article. 

1)    GST Registration for MSMEs 

In the case of Supply of Goods, w.e.f  01-04-2019 the basic threshold limit for GST Registration has been increased to Rs. 40 lac from Rs. 20 lac. In case of specified states said limit is increased to Rs. 20 lac from Rs. 10 lac. 

Threshold limit for GST registration in case of Supply of Services is Rs.20 lac & in case of specified states the said limit is Rs.10 lac.

Ecommerce operators were required to have compulsory registration under GST without any threshold limit i.e. right from the first transaction. However wef  01-02-2019 only those E-commerce operators who are liable to collect tax at source  on the taxable supplies made through it by other suppliers (where the consideration with respect to such supplies is to be collected by the operator) are liable for registration without any threshold limit. Thus other Electronic Commerce Operators can avail the basic threshold limit for registration.

Voluntarily Registered persons  can apply for cancellation of registration even before the expiry of one year from the effective date of registration. The restriction imposed earlier has since been removed. 

2)    Tax Invoice under GST law for MSMEs 

Registered persons are required to issue “Tax Invoice” before supplying taxable goods & services subject to the time limit prescribed under the GST Rules.

Registered persons supplying taxable goods shall issue Tax Invoice , before removal of goods or delivery of goods. This is subject to issuance of Delivery Challans in cases where the goods are sent on approval basis (subject to time limit of 6 months for approval).

Registered persons supplying taxable services shall issue Tax Invoice , before or after the provision of service but within a period of thirty days from the date of  supply of service:

In case of supply of goods, the tax invoice has to be prepared in triplicate (original for buyer, duplicate for transporter and triplicate for supplier); whereas in case of service, the invoice has to be prepared in duplicate (original for buyer and duplicate for supplier).  

GST law has prescribed the various details to be mentioned in a tax invoice.  However relaxation has been given to MSMEs in respect of HSN codes required to be mentioned on invoice as under : 

3)    GST Returns for MSME's

Similarly all eligible registered persons are required to furnish details of outward supplies in GSTR-1 by 11th of the next month.

Special return filing provisions for MSME’s Sector

As a trade facilitation measure, the government has given an option to  the registered persons having aggregate turnover of up to Rs. 1.5 crores in the preceding financial year or the current financial year to file GSTR-1 on quarterly basis.

The 28th GST Council meeting has recommended to increase the said limit of  Rs 1.5 crores to Rs. 5 crores,  however the same is not yet notified.

The 31st GST Council meeting has proposed a new system for filing of returns. This system is likely to be introduced w.e.f.  1st October, 2020.

The highlights of the proposed New GST return for small tax payer whose aggregate annual turnover is less than 5 cr  are :

Ø  Option to file return on Monthly/Quarterly basis.

Ø  Registered persons can file any one from RET-1 or RET-2 or RET-3.

Ø  RET-1 (Normal) can be filed on Monthly/Quarterly basis.

Ø  RET-2(Sahaj) & RET-3(Sugam) can be filed on Quarterly basis only. 

Nil Return *

A registered person shall be allowed to furnish a Nil return under section 39 in FORM GSTR-3B via (SMS) using the registered mobile number and the said return shall be verified by a registered mobile number based One Time Password facility. A Nil return shall mean a return under section 39 for a tax period that has nil or no entry in all the Tables in FORM GSTR-3B.

(*Above facility is not yet notified)

GST Annual Return & GST Audit

Every registered person other than the  specified persons( i.e. Input Service Distributor, Person paying GST TDS- TCS, Casual Taxable person, Non-resident Taxable person ) are  required to file Annual Return in form GSTR-9 on or before 31st of December following the end of such financial year.

The Composition Dealers are required to file Annual Return in Form GSTR-9A.

Every registered person whose aggregate turnover during a financial year exceeds Rs. 2 crores* is required to get his accounts audited and submit reconciliation statement in Form GSTR-9C.

* For FY 2018-2019 the said limit for filing Form GSTR-9C has been increased from Rs. 2 crores  to Rs. 5 crores. 

Various concessions have been given to the MSME sector with respect to filing of GST Annual Return and Audit for FY 2018-19 which are explained in the chart herein below : 

Please click here to read Part II of GST Compliances and Benefits Accorded to MSME’s