GST Council Updates for MSME
The Central Board of Indirect Taxes and Customs (CBIC) has relaxed scrutiny norms to facilitate easier GST registration for MSMEs. This includes:
Reducing physical verification requirements.
Completing registration within 7 days if no risk is identified.
Accepting a minimal set of documents, such as a property tax receipt or electricity bill, as proof of business premises.
Ensuring that GST officers request only the minimum necessary documentation, avoiding unnecessary delays. These measures aim to reduce compliance burdens and encourage more MSMEs to register under GST.
The GST Council has introduced several exemptions and rate reductions that can benefit MSMEs:
Gene Therapy: Exempted from GST, potentially reducing healthcare costs for employees.
Fortified Rice Kernel (FRK): GST reduced to 5%, benefiting food processors and suppliers.
Payment Aggregators: Exempt from GST on transactions below ₹2,000, easing compliance for small online businesses.
Penal Charges by Banks/NBFCs: No GST on penalties for loan defaults, reducing financial burdens on MSMEs.
Agricultural Products: Dried black pepper and raisins supplied by agriculturists are exempt from GST, benefiting agro-based MSMEs.
Several adjustments in GST rates have been made:
Used Vehicles: Sale of old and used vehicles, including electric vehicles, now attracts an 18% GST on the margin, up from 12%.
Restaurant Services in Hotels: GST rate options have been revised to 18% with Input Tax Credit (ITC) or 5% without ITC, effective from April 1, 2025.
Autoclaved Aerated Concrete (ACC) Blocks: Containing more than 50% fly ash content, now attract 12% GST.
Late Fee Waiver: Late fees for delayed filing of FORM GSTR-9C for the years 2017-18 to 2022-23 will be waived if filed by March 31, 2025.
Pre-Deposit for Appeals: Reduced to 10% for appeals involving only penalties, making the appeal process more accessible for MSMEs.
Invoice Management System (IMS): Proposed amendments aim to streamline the generation of FORM GSTR-2B and ensure reconciliation between suppliers and recipients.
The GST Council is expected to address the following in upcoming meetings:
GST Rate Rationalization: Simplifying the GST slab structure to reduce compliance complexities.
Compensation Cess: Deciding on the future of the compensation cess beyond March 2026.
Health and Life Insurance: Potential reduction in GST rates for health and life insurance premiums.
These updates indicate a concerted effort by the GST Council to ease the compliance burden on MSMEs, promote formalization, and ensure that the tax system is more inclusive and supportive of smaller enterprises.
