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 %

Head Office : Borivali(West),Mumbai

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Ajmera & Ajmera(Chartered Accountants)

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info@ajmeraandajmera.co.in

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