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Many decisions have been taken by the GST Council in its various meeting for the betterment and befit of MSME Sector:

General GST Provisions for MSME Sector

Details of such major decisions are as below

1. Goods, which are manufactured majorly by the unorganized MSME Sector, have been kept at lower rates or are exempted.

For example: Electrical switches and wires, Pipelines, plastic products are largely produced by the MSME Sector and earlier they didn't use to pay excise duty hence tax rate on these have been brought down from 28% to 18%. Similarly, rates of GST on jute and coir like handbags, ropes etc. which are mainly made in the cotton sector, have been reduced from 12% to 5%. Another example of rate reduction is on fishing hooks largely used by the fisherman (largely labour intensive) have been reduced from 12% to 5%.

2. Upper limit of turnover for opting composition scheme to be raised from 1 Crore to 1.5 Crore.

3. Now, composition dealer is allowed to supply services. Service providers with annual turnover up to Rs. 50 lakh may opt for composition scheme and the rate of GST applicable for such supplies would be 6%.

4. Levy of GST on reverse charge mechanism on receipt of supplies from unregistered suppliers, to be applicable to only specified goods in case of certain notified classes of registered persons, on the recommendation of GST Council.

5. In case of recipient fails to pay the due amount to the supplier within 180 days from the date of issue of invoice, the input tax credit availed by the recipient shall be reversed.

6. Filing of Nil returns have been simplified with one-step process.

7. Service providers making inter-state supplies, including supplies made through e-commerce operator, whose aggregate annual turnover does not exceed Rs. 20 lakh have been exempted from the requirement of registration under GST.

8. Extending the advance authorization (AA) / Export Promotion Capital Goods (EPCG)/ 100% Export oriented units (EOU) schemes to sourcing inputs etc. from abroad as well as domestically. Holders of AA/EPCG/ and EOU's are not required to pay IGST, Cess etc. on imports. Further, domestic supplies to holders of AA/EPCG and EOUs are treated as deemed exports under section 147 of CGST/SGST Act and refund of tax paid on such supplies is given to either the supplier or the recipient vide Notification No. 48/2017- Central Tax dated 18.10.2017.

9. Supply of taxable goods by a registered supplier to a merchant exporter for export shall attract a total GST rate of 0.1% thereby reducing working capital blockage for exporters. This provision has been made effective vide Notification No. 40/2017- Central Tax (Rate), dated 23.10.2017.

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10. Registered person making supply of goods are required to make payment of tax at the time of issuance of invoice and not at the time when advances are received. This has been implemented vide Notification No. 66/2017- Central Tax dated 15November 2017.

11. GST Council in its 23rd meeting held on 10.11.2017, reduced the amount of late fee payable for delayed filing of return in Form GSTR-3B from Rs. 200 per day for delayed filing. Through notification number 64/2017-Central Tax 15th November, 2017, a taxpayer whose tax liability for the month is “Nilâ€ï¿½, is liable to pay late fee of Rs. 20/- per day (Rs. 10/- per day each under CGST & SGST Acts) subject to maximum of Rs. 5000/- each under Act from October, 2017 onwards. In all other cases, the amount of late fee payable for delayed filing of return in Form GSTR-3B by other taxpayers has been reduced to Rs. 50/- per day (Rs. 25/- per day each under CGST & SGST Acts) subject to maximum Rs. 5000/- each under Act from October, 2017.


12. The uniform rate of tax @1% (0.5% under CGST Act and 0.5% under the respective SGST Act) is payable under the composition scheme for manufacturers and traders with effect from 1January 2018.

13. A person eligible for composition scheme also supplying exempt services including services by way of extending deposits, loans or advances is so far as the consideration is represented by way of interest or discount, would not become ineligible for the composition scheme. Further, for computing the aggregate turnover for eligibility for the scheme, the turnover of the exempted services, including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, supplied by a taxpayer will not be included. This has been implemented vide issuance of order no. 01/2017-Central Tax dated 13.10.2017.

14. The GST Council, in its 25th Council meeting held on 18.01.2018, allowed taxable persons who have obtained voluntary registration to apply for cancellation even before the expiry of one year from the effective date of registration.


The Micro, small and medium enterprises (MSME's) sector is of special significance for the Indian government, excepting it to offer higher employment opportunities by 2020. In line with the commitment to MSME sector, relaxations have been or are being implemented for them . As MSME's become accustomed to a larger compliance climate, a better level of preparedness and discipline in conducting business will gradually be a part of operation. With the government's commitment to strengthen MSME's on all fronts including GST, it is expected that the current challenges would be stabilized and the industry gradually take a positive turn to fulfill the nation's vision.

The author can also be reached at Ruchika.tulsyan@gmail.com


Published by

CA Ruchika Tulsyan
(Chartered Accountants)
Category GST   Report

  24 Shares   3888 Views


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