Obligatory 1% GST legal responsibility from January 1: Who all must pay? Here is your cheat sheet


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Obligatory 1% GST legal responsibility from January 1: Who all must pay

About 45,000 taxpayers, which equals to solely zero.37 p.c of the entire companies registered within the Items and Providers Tax System, will probably be required to satisfy the necessary requirement of a 1% p.c money system of GST legal responsibility with impact from January 1. This comes after the Central Board of Oblique Taxes and Customs (CBIC) amended GST guidelines so as to curb tax evasion by the use of faux invoicing. However will all of the registered individuals should pay 1 p.c money legal responsibility? Here is your cheat sheet.

Who must pay?

The rule is relevant to solely these registered individuals whose worth of taxable provide, aside from exempt provide and export, in a month exceeds Rs 50 lakh – which means these whose annual turnover is greater than 6 crore.

The rule isn’t relevant within the instances the place the registered individual: 

  1. has deposited greater than Rs 1 lakh as revenue tax in every of the final two years. 
  2. has obtained a refund of greater than Rs 1 lakh within the previous monetary 12 months on account of export or inverted tax construction. 
  3. has paid output tax by money in extra of 1% of the entire output tax legal responsibility, utilized cumulatively, upto the month within the present monetary 12 months. 
  4. is a authorities division, PSU, native authority, statutory physique.

READ MORE: Obligatory 1% money fee of GST legal responsibility from January 1, relevant to 45000 taxpayers

Will the rule have an effect on real taxpayers?

The rule is just relevant to taxpayers who’ve taxable provides of greater than Rs 50 lakh in a month, which quantities to an annual turnover of greater than Rs 6 crore. In addition to, the registered individuals falling in any of the exempted class together with paying Rs 1 lakh as Revenue Tax in every of the final two monetary 12 months or having obtained refund of greater than Rs 1 lakh within the earlier 12 months on account of export or inverted responsibility construction, and so forth. are additionally out of purview of this rule. With these exemptions and circumstances and exact focusing on, the requirement of necessary fee of at the least 1% of the tax legal responsibility in money would apply solely to dangerous or suspicious taxpayers and real taxpayers would stay excluded.

Will it have an effect on small companies

Based on the CBIC, the money fee of 1% is to be calculated on the tax legal responsibility in a month and never turnover of the month. Infact, it quantities to solely zero.01% of turnover. For instance, if a supplier has made a sale of Rs 1 crore of the products whose tax price is 12% and if he’s discharging his tax legal responsibility greater than 99% although ITC, then he has to pay solely Rs 12,000 underneath this rule. However, a composition supplier would have paid Rs 1 lakh in money with this quantity of sale. 

READ MORE: GST taxpayers to get flexibility to resolve on month-to-month tax fee

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