MSMEs Current Affairs - 2019
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The GST Council meeting on January 10 has taken the following important decisions:
- The exemption limit for Goods and Services Tax (GST) registration has been increased to Rs 40 lakh from the current Rs 20 lakh to ease the cost of compliance for small taxpayers or micro, small and medium enterprises (MSMEs).
- This exemption limit has been doubled to Rs 20 lakh for North-Eastern and hilly states.
- The increased exemption limit of Rs 40 lakh is applicable for those businesses who deal in goods and also do intra-state trade and not for those who do inter-state transactions.
- The small States such as Puducherry which have a small assess base have been given the option to ‘opt in’ or move to a lower exemption and registration limit.
- The threshold limit for the compensation scheme under which small traders and businesses pay a 1 per cent tax based on turnover has been increased to Rs 1.5 crore. The dealer under the composition scheme cannot issue tax invoice because the dealer cannot charge tax from their customers. They need to pay the tax out of their own pocket. The dealer is required to issue the bill of supply.
- Service providers and suppliers of both goods and services up to a turnover of Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6 per cent.
- Kerala has been allowed to levy a 1 per cent calamity cess on the intra-state sale of goods and services for a period of up to two years to mobilise revenues to meet the cost of rehabilitating parts of states that were ravaged by floods.
- A seven-member group of ministers would be formed to address the differences of opinion emerged at the meeting on the issues like the issues related to the lottery.
These decisions would be beneficial for MSMEs, which were adversely affected after the introduction of GST.
Goods and Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.
Every decision of the Goods and Services Tax Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting. The vote of the Central Government shall have the weightage of one-third of the total votes cast, and the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
Parliament has passed Insolvency and Bankruptcy Code (Amendment) Bill, 2018 to bring relief to home buyers and Micro, Small and Medium Enterprises (MSMEs). The Bill replaces ordinance promulgated in this regard and amends Insolvency and Bankruptcy Code, 2016.
Key Features of Bill
The Bill recognises home buyers as financial creditors in the real estate project and giving them due representation in the Committee of Creditors (CoC), thus providing significant relief to home buyers. It will allow home buyers to invoke Section 7 of IBC, 2016 against errant developers.
This will allow financial creditors to file application seeking insolvency resolution process. As financial creditors, home buyers will be able to participate in decision-making process when developers are declared bankrupt under IBC, 2016. The bill also proposes to reduce minimum voting threshold for Committee of Creditors (CoC) to 66%, from 75% for key decisions.
Besides, the Bill also benefits Micro, Small and Medium Enterprises (MSME) sector from IBC. It allows promoter of MSME to bid for their own enterprise undergoing the insolvency resolution process as long as they are not wilful defaulters.
The IBC, 2016 provides time-bound process to resolution of insolvency among companies and individuals. Insolvency is situation where individual or company is unable to repay their outstanding debt. Government in November 2017 had set up Insolvency Law Committee to review IBC and identify issues in its implementation and suggest changes. The Committee had made several recommendations such as exempting MSMEs from certain provisions of IBC, treating allottees under real estate project as financial creditors, reducing voting thresholds of committee of creditors (CoC), among others. Subsequently, President had promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 in June 2018 after approval of Central Government.