Assam Finance Minister Himanta Biswa Sarma heads the group of ministers (GoM) of state finance ministers that have been set up to look into various issues pertaining to a scheme for small taxpayers under the Goods and Services tax (GST), also known as the composition scheme.
The GoM will also look into the proposal to reducing GST rates on air-conditioned restaurants from 18 percent to 12 percent.
Deputy Chief Minister of Bihar Sushil Modi, Jammu & Kashmir Finance Minister Haseeb Drabu, Punjab Finance Minister Parminder Singh Dhindsa and Chattisgarh's Commercial Taxes Minister Amar Agarwal will be a part of the GoM.
Composition scheme is an alternate method of taxation, which allows small businesses with annual turnover up to INR 75 lakhs, to pay tax at a concessional rate, as well as reduce the compliance cost.
The revenue threshold is INR 50 lakhs for dealers across nine states such as Arunachal Pradesh, Nagaland, Tripura, among others.
The enrolment into the plan is however, optional.
On Friday, the GST Council headed by Finance Minister Arun Jaitley decided to raise the annual turnover threshold on the scheme to INR 1 crore and reopen its registration for the third time till March 31, 2018.
Under the scheme, traders, manufacturers and restaurants can pay tax at 1, 2 and 5 percent, respectively.
The move to widen the turnover threshold is aimed at easing the compliance burden for taxpayers as they will have to file returns only once in a quarter as against monthly returns that needs to be filed by other normal taxpayers.
However, dealers cannot avail input tax credit, unlike a normal taxpayer.
Input credit means at the time of paying tax on output, a producer, trader or service provider can reduce the tax already paid on inputs.
The committee of GoM will take crucial decisions related to the scheme such as if the plan can be extended to taxpayers making inter-state supplies of goods, which was earlier not allowed.
The officials will examine whether turnover of exempted goods under GST can be excluded from the total turnover threshold for levying tax under composition scheme.
Apart of rationalising tax structure of different categories of restaurants, the committee will also examine if input tax credit (ITC) can be made available to registered taxpayers under GST from dealers who have opted for composition scheme.
Initially, the response for the composition scheme was lukewarm, with only 10.24 lakh dealers opting for it over a span of one and half months, starting July 1. Last month, the Council decided to reopen registration for the scheme from September 17.
This time, however, more than 5 lakh dealers opted for the scheme over just 13 days, taking the total number of assessess to 15.43 lakhs.
