Input credit collected under GST to be deposited in a fortnight

Union Minister for Chemicals and Fertilisers Ananth Kumar on Saturday said the input credit collected from traders under the goods and services tax (GST) would be deposited in their accounts within a fortnight.

Kumar said the liquidity in the market would increase with the deposit of input credit. “Input credit that was collected till now will be calculated on October 10 and 18. After a fortnight, the amount will be credited to the account of traders. This will enhance liquidity in the country. The economy will improve,” he told reporters here. “It is estimated that about Rs 50,000 crore will be paid to the traders. It will strengthen the economy,” he said.

The Union minister said the decision taken by the Finance Minister Arun Jaitley and the GST Council on Friday has brought great relief to the micro, small and medium enterprises (MSMEs), and small traders. He explained the composite tax limit has been increased up to Rs 1 crore. “MSMEs and small traders who do trade up to Rs 1 crore, for them one per cent and two per cent, and for restaurants and eateries the tax has been brought to five per cent. I feel that a majority of traders and MSMEs are relieved now.” 

Kumar said the annual turnover limit for composite tax of one per cent and two per cent on MSMEs, and small traders had been increased from Rs 75 lakh to Rs 1 crore. 

Similarly, the benefit of five per cent GST on hoteliers had been increased by enhancing the annual turnover limit. “I feel that a majority of traders and MSMEs are satisfied now,” said Kumar. In addition to it, the rule of filing returns every month has been amended for small traders, he added.

He said traders with an annual turnover of Rs 1.5 crore can now file returns once in three months. Similarly,  many relaxations have been given to exporters. Kumar said the government had addressed the problem of reverse tax at Friday’s meeting.

“There was a major problem of reverse taxation. Earlier, the GST was borne by those who used to avail services or goods from small traders. Now, that has been suspended. Now, there is no need to pay reverse tax.”

Kumar said the GST itself was a major reform. He said currently, there was one market in the entire tax structure with no restriction on transportation such as entry tax or octroi, and sales tax. All 21 taxes have been merged with one GST. 

The GST has brought 65 million traders into the tax net, which was earlier 30 million.