The Micro, small and medium enterprises (MSMEs) do not need to pay minimum 1% Goods and Services Tax (GST) liabilities in cash as businesses with an annual turnover of less than Rs 6 crore are spared from the new rule. In this article, we will discuss the GST rule is not applicable for MSME.
GST rule is not applicable for MSME
The Central Board of Indirect Taxes and Customs (CBIC) last week launched a change in the GST rules that restricted the use of input tax credit (ITC) for discharging GST liability to 99%, the official said requesting anonymity. The move was aimed at restricting the misappropriation of ITC through fake invoicing.
To preserve small businesses and honest taxpayers there are some exemptions to this rule. The new rule is not applicable in such cases where GST registration entities have already collected more than Rs 1 lakh as income-tax in last two years.
It is also not applicable to registered entities who have obtained a refund of more than Rs 1 lakh in the prior financial year on account of export, government officials has stated that government departments and local authorities are also exempted from the rule.
Further Notification by CBIC
An authorised business runs for-profit and minimum value extension is expected from them. It is only where a lot of fake credit is used that no tax payment in cash proceeds. CBIC officials state that, giving the reason behind implementing the new rule.
This rule will assist to regulate fake invoices fraudsters who avail and pass on ITC by dummy, fake and dormant beings which show high turnovers, but have no financial credibility and flee after publishing fake invoices and misusing ITC.
The new rule is the result of a through deliberation by the GST Law Committee to evaluate the menace of fake invoices and misappropriation of ITC. The government in November originated a nationwide drive to nab such fraudsters where 175 people have been arrested under the continuing drive and more than 1,800 cases have been booked against over 8,000 fake entities.
In case, you require any kind of guidance related to the GST Return Filing, please feel free to contact our business advisors at 8881-069-069.
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