Feb 27, 2020
Companies involved in the production of ice cream, pan masala and tobacco will not excluded from the projected higher threshold limit for mandatory registration and new composition scheme for services under the Goods and Services Tax (GST). The new proposals shall be applied and come into effect from April 1st 2020.
Under the new contrivance, threshold for goods suppliers in 20 States and the one Union Territory (UT), i.e. Delhi, for mandatory registration shall be ₹40 lakhs, against the current ₹20 lakhs.
Like-wise for 7 North-Eastern States (excluding Assam) and the hilly State of Uttarakhand, threshold for mandatory registration shall be ₹20 lakhs as against ₹10 lakhs as per date. Telangana and the Union Territory of Puducherry shall continue to have threshold of ₹20 lakhs.
Application of Composition Scheme
With the decision to introduce a new Composition Scheme for services, businesses with annual turnover up to ₹50 lakhs shall be eligible for the new scheme.
According to the draft notifications, businesses of three categories of goods and their supply have been excluded viz…. The first category is ice cream and other ice products, whether or not having cocoa, while the second category is of pan masala and the third category comprises tobacco and other by-products of manufactured tobacco and its substitutes. Ice cream attracts a GST @ of 18 per cent, tobacco and pan masala attract GST @ of 28 per cent. There is also a cess on tobacco.
“The product-specific exclusions in the higher threshold proposed for GST and products initially could act as precedents for inclusion of more products in future based on the compliance experience and identification of avoidance prone sectors/products,” M.S. Mani, Partner at Deloitte India, said.
Though no reasons have been given for the exclusion of these products and related supplies, there have been precedent of keeping more vigil on these products.
Experts said ice cream, chocolate and crumble are considered to be in the ‘high risk’ category from the health point of view. Also, barring a few, most of the ice cream businesses are small ones. The Government prefers to keep these business in the lower threshold category.