Does threshold exemption really exist ?
By: – KASTURI SETHI
Goods and Services Tax – GST
Dated:- 7-7-2017<\/p>\n
DOES THRESHOLD EXEMPTION REALLY EXIST UNDER GST ACT ?
\n Answer is big “NO”. Threshold exemption of turnover of ₹ 20 lakhs is only in the name. Threshold exemption of ₹ 20 lakhs has been denied by Govt. by attaching following strings to the businessmen :-
\nAs per Section 24 of the CGST\/SGST Act, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:
\n i) persons making any inter-State taxable supply;
\n ii) casual taxable persons;
\n iii) persons who are required to pay tax under reverse charge;
\n iv) electronic commerce operators required to pay tax under sub-section (5) of section 9;
\n v) non-resident taxable persons;
\n vi) persons who are required to deduct tax under section 51;
\n vii) persons who supply goods and\/or services on behalf of other registered taxable persons whether as an age<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ption. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ncrease = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n as not increased at all. Thus it remained stagnant at ₹ 1.50 crores. The rate of inflation does not reflect true picture inasmuch as in real life prices of all items have increased five or six times. Thus SSI units have suffered a lot due to stagnant threshold limit for a decade. As per well-known Statisticians, statistical data does not indicate 100% accuracy. So the rate of inflation cannot be relied upon for all economic policies of Govt. Govt. cannot deny the sky rocketing prices of all commodities. The prices of gold, an international currency gives the true picture of sky rocketing prices of all the commodities as prices are influenced by international marketing forces. Govt. has done gross injustice to all manufactures, dealers and service providers by fixing threshold exemption of just ₹ 20 lakhs each. Ultimately, repercussion will be on poor and middle class families. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n as well as non-enhancement threshold exemption limit for a decade, now threshold exemption is suggested to be revised as under:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n eligible for the exempted seller. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ve not improved the lot of common man, i.e., lower or middle income class. They are still a suffering and are suffocated to a large extent by the recent phenomenal increase in the day-to-day prices of commodities and that too price increase effected by the traders due to new GST with respect to hotels, food products, sand, construction materials etc. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ld do under VAT and avoid payment of Tax but for those who supply goods to other registered persons, it is a necessicity to get register to continue the business w\/o loosing custmers. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n essees not knowing about existing taxes as they are not coming under tax net". = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n aware of this. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n \nSh.Ahok Khanna C.A. Thanks for your compliments, Sir. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Does threshold exemption really exist ?By: – KASTURI SETHIGoods and Services Tax – GSTDated:- 7-7-2017 DOES THRESHOLD EXEMPTION REALLY EXIST UNDER GST ACT ? Answer is big “NO”. Threshold exemption of turnover of ₹ 20 lakhs is only in the name. Threshold exemption of ₹ 20 lakhs has been denied by Govt. by attaching following … Continue reading “Does threshold exemption really exist ?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-5904","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/5904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5904"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/5904\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n A businessman with turnover of ₹ 20 lakhs is a small business man whether he is a manufacturer or dealer or service provider. Virtually, Govt. has snatched threshold exemption from small persons by imposing aforesaid conditions on them. It tantamounts to snatching fundamental right to live. These are the noiseless cries of small business which must be listened to by the Govt. In case the Govt. intends to woo the hearts of small businessmen, nay, middle class families, Govt. must remove all the caps imposed upon them and enable them to avail threshold exemption like in pre-GST period. A person with a turnover of 20 lakhs has to pay rent of premises, maintenance of premises, Income Tax and now GST and life is not restricted to the basic needs of Roti, Kapda Aur Makan. There are necessities like education and health expenses, savings for future etc. How far such meager threshold exemption with too much restrictions is justified ? The very purpose of threshold exemption is d<\/p>\n
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\nNIL
\n2015
\nNo increase
\nNIL
\nNo increase
\nNIL
\n2016
\nNo increase
\nNIL
\nNo increase
\nNIL
\n2017 (GST w.e.f. 1.7.17}
\n20 lakhs
\n20 lakhs
\nGST(w.e.f.1.7.17)
\nNow after a decade manufacturers, wholesale dealers, Retailers and Service Providers have been brought at par by way of allowing threshold exemption limit of turnover of just ₹ 20 lakhs each. Here it would be pertinent to analyse why any Govt. did not increase threshold exemption for such a long period which was overdue. Rate of inflation may be the possible factor for non-increase of threshold exemption for a decade. So it is worthwhile to have a look into the history of rates of inflation existed during last 15 years which are given in the table given below:
\nYEAR
\nRATE OF INFLATION BASED ON CPI
\nTHRESHOLD EXEMPTION ALLOWED TO MANUFACTURER
\nTHRESHOLD EXEMPTION ALLOWED TO SERVICE PROVIDER
\nPETROL PRICE PER LTR.
\nGOLD PRICE
\nInternational currency
\n2003
\n3.719
\n 1 Crore
\nNIL
\n31.00
\n5718.95
\n2004
\n3.785
\n 1 Crore
\nNIL\n<\/p>\n
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\n Modvat facility was introduced in April, 1986 and thereafter it was called Cenvat Credit and Inp<\/p>\n
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\n(i) For Manufacturers (SSI units) : Rs.two crores
\n(ii) For dealers : ₹ 50 lakhs
\n(iii) For Service Providers : ₹ 30 lakhs
\n Such increase is not unjustified by any amount of logic.
\n Reply By MARIAPPAN GOVINDARAJAN as =
\nWelcome Sethi Sir to Articles Section. You have impressed on your first article itself.
\n Dated: 7-7-2017
\n Reply By KASTURI SETHI as =
\nSir,
\n Thanks a lot. Really, you are my source of inspiration.
\n K.L.SETHI
\n Dated: 7-7-2017
\n Reply By NANDAKUMAR PANICKER as =
\nNice article Sethi sab.
\nMoreover, it appears that in case of supply received from an unregistered person, whether he is falling under threshold exemption or not, to a registered person; he is liable to pay the tax under reverse charge. I am referring Section 9(4) of CGST. That means, the Govt. is still not losing the revenue in most of the cases. Please correct me if I <\/p>\n
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\n Dated: 8-7-2017
\n Reply By KASTURI SETHI as =
\nSH. GOKARNESAN.S SUBRAMANIAN,
\n Sir, Thanks for your your appreciation and inspirational compliments.
\n Dated: 8-7-2017
\n Reply By Dr. Sanjiv Agarwal as =
\nNice piece indeed. . Congratulations
\n Dated: 8-7-2017
\n Reply By swaminathan venkataraman as =
\nMakes for an interesting read; for that matter, in one's longstanding form conviction, in the ultimate analysis, any such threshold for 'exemption' is highly arbitrary, founded\/stemmed on a dubious idea, – being a 'rule of thumb', arbitrarily fixed by bureaucracy,with no sanctity attached !
\nUniversally so, not merely in taxation regimes, but in every other- e.g. KAR rules, pending notification, under RERA – see the separate post of y'day !
\nNOTE: It is time now; what needs but remains to be realised , going by wisdom to be gathered from past experience, is that, – it is any such arbitrarily fixed threshold, with no rhyme or reason, tha<\/p>\n
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\n Dated: 8-7-2017
\n Reply By BALAJEE K S as =
\nGood Article and analysis. Thank you so much Sir
\n Dated: 8-7-2017
\n Reply By KASTURI SETHI as =
\nI am thankful to Dr.Sanjiv Agarwal, Sh.Baalajee K.S., Sh.Swaminathan Venkat Raman for liking my article.
\n K.L.SETHI
\n Dated: 8-7-2017
\n Reply By PMR Gowrissankar as =
\nSihey cannot collect GSTr, indedd you have analysed the problem of assessees not knowing about existing taxes as they are not coming under tax net. In addition to above, my assessee which is a trust having income of 15 lakhs donation and rent from commercial buildings of ₹ 9 lakhs per annum who is adviced to take GST as the turnove<\/p>\n
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\nThe clause of payment of GSt under RCM for suplied received from URD must be revoked and it should be left to the business entity to decide whether to pay under RCm and avail ITC or go for cost addition to goods supplied.
\nThe Associates of the Trade and Tax consultants must strongly put this across to governmwnt and to GST Council.
\n Dated: 9-7-2017
\n Reply By KASTURI SETHI as =
\nSh. Vinay Kunte Ji,
\n Sir, Thrilled to peruse your comments and analytical approach. Thanks for your contribution on the issue.
\n Dated: 9-7-2017
\n Reply By Ashok Aggarwal as =
\nVery nicely analysed article. Earlier small service providers were encouraged by companies because they were exempted and no tax was payable by recipient of service also. Now they will not get clients as the tax will have to be paid under reverse charge mec<\/p>\n
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\n Just for enrichment of my knowledge.
\n Thanks & Regards.
\n K.L.SETHI
\n Dated: 10-7-2017
\n Reply By Abhishek Panicker as =
\nRespected Sir,
\nAppreciate the analysis made in the debut article. Your stint in the department has ably assisted in you compiling this masterpiece and has brought out in the open the mood swings of the powers that be.
\nSSI units began their exemption journey (if I am not mistaken) way back in the year 1985 [77, 85\/85-CE] with exemption limit of 7.5 lakhs without any strings attached of having any SSI registration certificate issued by the Directorate of Industries and this exemption was allowed in the next FY if they had not crossed 7.5 lakhs. Later the SSI notification 175\/86-CE saw upheavals in the form of the unwarranted notification 55\/92-CE later and the corrective notification 67\/92-CE. Let aside the fact that the exemption grew to 15 lakhs and later to 30 lakhs and in the ye<\/p>\n
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\nBe that as it may, as rightly questioned by you "Does threshold exemption really exist?" should be what all the SSI associations be asking the government.
\nThe cost of running a factory is not cheap and coupled with the GST return filing and the complex rules and forms, this would pinch the SSI unit further.
\nAgreed, that there may be some instances of evasion of duties by these SSI units but for the fault of a few should the entire industry suffer.
\nFor the ineptness of the authorities in catching hold of these unscrupulous elements, others should not be held to ransom.
\nEvery law comes along with a loophole and only those who are intelligent enough, exploit it. Same would be bound to be replicated in the present scenario too.
\nI sincerely feel that if the government really wants to extend an exemption, it should be without any strings attached. Because if any of the 14 clauses (which the learned author has cited) is violated, the exemption would be denied an<\/p>\n
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\n Dated: 14-7-2017
\n Reply By Ganeshan Kalyani as =
\nSri Kasturi Sir , the concern in the article is true. Nicely written. I know the hard work that needs to write an article. Your hard work and effort is appreciable. I read all your articles and liked the way you write it. The words flow free without any jargon or legal language. It is simple and easy read and understand. I remember the first article you wrote. The recent one also where you have highlighted the revenue loss to the exchequer. The topic you choose to write is carrying weightage. Thanks Sir once again.
\n Dated: 15-7-2017
\n Reply By KASTURI SETHI as =
\nSh. Ganeshan Kalyani Ji,. Thanks for devoting your precious time to read and expressing your valuable views.
\n Dated: 15-7-2017
\n Reply By Rakesh Garg as =
\nWell stated, Sethi Ji. A nice and informative article. Thanks
\nWhile making the law, the Government has ignored the Indian conditions and economic scenario. Just take on<\/p>\n
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