Mandatory 1% GST legal responsibility from January 1: Who all should pay? Here’s your cheat sheet

Image Source : FILE PHOTO Mandatory 1% GST legal responsibility from January 1: Who all should pay About 45,000 taxpayers, which equals to solely 0.37 p.c of the whole companies registered within the Goods and Services Tax System, will likely be required to meet the obligatory requirement of a 1% p.c money system of GST legal responsibility with impact from January 1. This comes after the Central Board of Indirect Taxes and Customs (CBIC) amended GST guidelines as a way to curb tax evasion by the use of pretend invoicing. But will all of the registered individuals must pay 1 p.c money legal responsibility? Here’s your cheat sheet. Who should pay? The rule is relevant to solely these registered individuals whose worth of taxable provide, apart 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 shouldn’t be relevant within the circumstances the place the registered particular person:  has deposited greater than Rs 1 lakh as revenue tax in every of the final two years.  has acquired a refund of greater than Rs 1 lakh within the previous monetary 12 months on account of export or inverted tax construction.  has paid output tax by money in extra of 1% of the whole output tax legal responsibility, utilized cumulatively, upto the month within the present monetary 12 months.  is a authorities division, PSU, native authority, statutory physique. READ MORE: Mandatory 1% money cost 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. Besides, the registered individuals falling in any of the exempted class together with paying Rs 1 lakh as Income Tax in every of the final two monetary 12 months or having acquired refund of greater than Rs 1 lakh within the earlier 12 months on account of export or inverted responsibility construction, and so on. are additionally out of purview of this rule. With these exemptions and circumstances and exact focusing on, the requirement of obligatory cost of a minimum of 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 According to the CBIC, the money cost 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 0.01% of turnover. For instance, if a seller 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 below this rule. On the opposite hand, a composition seller would have paid Rs 1 lakh in money with this quantity of sale.  READ MORE: GST taxpayers to get flexibility to determine on month-to-month tax cost Latest Business News