New Delhi: Measures are being taken to protect small businesses from the burden of Goods and Services Tax (GST), said a report on Monday. According to the report, a group of ministers (GoM) has recommended steps for making it easier for small businesses while another similar panel has cleared levying of a calamity cess in states like Kerala. (Also read: FinMin allows businesses to claim GST input credit benefit for FY’18 till Mar 2019)

The Times of India said a ministerial group on Micro, Small & Medium Enterprises (MSMEs) backed the proposal to increase the registration threshold over an annual turnover of Rs 20 lakh. This would help put several small businesses out of the GST net but, the report pointed out, it will also make the system prone to leakages as many businesses will not be tracked at all.

The panel has favoured another facility for a ‘composition’ scheme for service providers with a turnover of up to Rs 50 lakh. The scheme is available to small manufacturers and traders and the GoM has suggested that these businesses be allowed to file annual returns instead of making quarterly filings. However, they would have to make quarterly tax payments.

Meanwhile, another GoM, which also met on Sunday, has agreed to suggest a cess to be levied by states like Kerala to meet expenditure related to natural calamities.  But this would need clearance from the GST Council. “Kerala had asked the GST Council for levying cess to fund rehabilitation work. The GoM has recommended to the Council that Kerala be allowed to levy 1% cess for two years,” Sushil Modi told reporters after the meeting.

The GoM has also recommended amendments to the Fiscal Responsibility and Budget Management Act to increase the borrowing limit for funding natural calamity-related spending by the states. There was also a suggestion to have a permanent cess for natural calamities, which was rejected by the ministerial panel.

The proposal came due to a significant dip in the collection from the national calamity contingency duty imposed on several products as many of them are covered under GST. So the annual collection is projected to reduce to Rs 2,500 crore from Rs 5,700 crore in 2015-16.