composition scheme under gst - ajmera &...
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COMPOSITION SCHEME UNDER GST
Composition Levy Under GST
• Under GST for tax payer, a scheme called Composition Scheme is
offered to taxpayer, by which the taxpayers are given the option to pay
an amount calculated on some parameter in lieu of tax calculated based
on complex calculations expected by that law. In the proposed GST law
also the composition schemes will be offered to certain set of taxpayers.
The same is contained in Section 8 of Model GST law.
• The taxable persons having Aggregate annual turnover of Rs. 50 lakhs
are proposed to be made eligible for Composition levy.
Eligibility
Turnover < 50 Lacs
ApplicationLimitation
Not Allowed
Inter-State Supply
No input Tax credit( Cannot collect tax
separately on Supply )
Optional Scheme Need to Apply
ELIGIBILITY FOR COMPOSITION LEVY
Eligibility
Turnover < 50 Lacs
Turnover CalculationDefinition of : Aggregate turnover
Includes :- Taxable Supplies- Non Taxable Supplies - Exempt Supplies - Exports
Excludes :- GST to be paid on these supplies - Value of Inward Supplies - Value of Supplies taxable under Reverse Charge
Total for a PAN
Goods / Services
All Business Verticals
All India Basis
CONDITIONS FOR OPTING COMPOSITION LEVY
1. Restriction from effecting inter-state supplies:
Composition scheme is not applicable to person who undertake
inter-state supplies i.e. export goods to other state and/or
imports from other states
2. Collection of taxes:
Person opting for composition scheme can’t collect Taxes from
recipient of Service or Goods.
3. Applicable to all the transaction under same PAN: ( ONE PAN BASED )
If taxable person has multiple business and has opted for different registration foreach business, composition scheme would be applicable to all business, it can’t beapplied for selected businesses only.
Mr. X has businesses namely:i. Sale of Cloths (goods)ii. Sale of electrical appliances (goods)iii. Giving services (service)
So in this case, Whether Mr. X has to opt composition scheme for all the businessincluding services.
4. Not eligible to input tax credit:
To pay tax under composition scheme, the assessee cannot utilize the input tax
credit.
One PAN Based
RETURNS UNDER COMPOSITION LEVYRETURNS UNDER COMPOSITION LEVY
• A registered taxable person paying tax under the provisions of section 8
of this Act shall furnish a return for each quarter or part thereof,
electronically, in such form and in such manner as may be prescribed,
within Eighteen days after the end of such quarter.
• GSTR-4 has been prescribed by the government under draft business
processes an return to be filed by an compounding dealer.
• Compounding dealer shall furnish the first return for the period starting
from the date on which he becomes a registered taxable person till the
end of the quarter in which the registration has been granted.
CANCELLATION OF PERMISSION TO OPT CANCELLATION OF PERMISSION TO OPT COMPOSITION LEVYCOMPOSITION LEVYSections 66, 67 and 68
If proper officer believes that person opting composition scheme is not
eligible for the same OR permission granted to opt composition scheme was
granted incorrectly,
He may cancel the permission to opt composition scheme and demand the
following amount:
Differential tax i.e. taxpayable under normalscheme if the personwould not opt thecomposition scheme.
Penalty equivalent tothe tax or any higheramount as may beprescribed by the Govtfrom time to time.
RATE OF TAXRATE OF TAX
The rate of tax prescribed for different categories of registered persons havebeen described below:
Category of registered persons Rate of tax
Manufacturers (Other than manufacturers of notifies goods)
Suppliers (Food or any other article for human consumption or any drink other than alcoholic liquor
for human consumption)
Other suppliers
1 %
2.5 %
0.5 %
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Ajmera & Ajmera(Chartered Accountants)
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