Goods and Services Tax

Composition Levy Scheme in GST

GST – GST Law and Procedure – 011 – Chapter Eleven Composition Levy Scheme in GST 1. Composition Levy Scheme under GST law. Composition levy scheme is a very simple, hassle free compliance scheme for small taxpayers. It is a voluntary and optional scheme. Benefits of composition scheme Easy compliance as no elaborate accounts and records to be maintained Simple Quarterly Return Quarterly payment of tax Provisions related to composition levy have been provided under section 10 of the Central GST Act, 2017 and Chapter 2 of the CGST Rules, 2017. Under this scheme, a registered taxable person, whose aggregate turnover does not exceed Rs. One crores (Rs. 75 lakh for special category States except J & K and Uttrakhand) in the financial year 2016-17 may opt for this scheme. A taxpayer registered under composition levy scheme has to pay an amount equal to certain fixed percentage of his annual turnover as tax to the government. This tax has to be paid on quarterly basis. Such taxpayer doe

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GST law. CBEC vide Order No. 01/2017-Central Tax dated 13th October, 2017 has clarified that a person supplying any exempt services including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be ineligible for the composition scheme. In computing his aggregate turnover in order to determine his eligibility for composition scheme, value of supply of the exempt services including services by way of extending deposits, loans or advances shall not be taken into account. 3. Registration and intimation under the scheme. Registration under GST law is compulsory for opting for the Composition scheme. A person who is registered under existing laws and has obtained a provisional registration under GST has to file an electronic intimation in the FORM GST CMP-01 on the common portal (www. gstn.gov.in). He can file this intimation either before the appointed day (i.e. day on which GST came into force 01/0

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erson who wants to opt for composition levy has to file an electronic intimation in the FORM GST CMP-02 prior to the commencement of financial year for which the option to pay tax under composition levy is exercised and also has to a furnish a statement in FORM GST ITC-03 in accordance with the sub rule (4) of Rule 44 of CGST Rules, 2017, within 90 days from the commencement of the relevant financial year. A person having a single PAN and registered in more than one State under GST can opt for the scheme, provided he meets all the conditions of the scheme, only if all such registered persons opt for the Composition scheme. A registered person cannot choose to opt for the Composition scheme in one state and not in other states. Further, an intimation for withdrawal from the scheme; or denial of the scheme with respect to any one registered person under the same PAN will be applicable for all such registered persons. 4. Effective Date for composition levy Effective date for the taxpayers

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taxable persons who are not eligible for the scheme is as below: i. A casual taxable person i.e. a person who occasionally undertakes supplies in a State or Union Territory where he has no fixed place of business. ii. A non-resident Taxable person i.e. a person who occasionally undertakes supplies but has no fixed place of business or residence in India. iii. A supplier of services except a person engaged in supply of restaurant service. iv. A person engaged in providing inter-state supply of goods. v. A person engaged in supply of non-taxable goods i.e. goods which are not taxable under GST law vi. A person engaged in supply of goods through an Electronic Commerce Operator (ECO) who is required to collect Tax at source under section 52 of the CGST Act. vii. The goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his a

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para 6 of Schedule II of the CGST Act (supplier of restaurant Service) has to pay 5% (2.5% CGST and 2.5% SGST/UTGST) of turnover in a state or Union Territory, as the case may be. An eligible person engaged in any other supply has to pay 1% (0.5% CGST and 0.5% SGST/ UTGST) of turnover of taxable supplies of goods in a state or Union Territory, as the case may be. 7. Bill of Supply A taxable person opting for the scheme has to issue bill of supply as he is not eligible to issue taxable invoice under GST. He has to mention the words composition taxable person, not eligible to collect tax on supplies at the top of every bill of supply issued by him. 8. Conditions & Restrictions under the scheme A person opting for the scheme has to adhere to the following conditions Issue bill of supply in the prescribed manner Pay all taxes on purchases including taxes to be paid on reverse charge basis Don t claim input tax credit of purchases Mention the words composition taxable person on every no

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e day he ceases to satisfy any of the conditions and shall issue tax invoice for every taxable supply made thereafter and he shall also file an intimation for withdrawal from the scheme. 10. Conditions which may render a person in-eligible for the scheme A person is in-eligible for the scheme, if he wrongly opts for the scheme. his turnover exceeds Rs. One crore (In the case of 9 North East and special category states, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh, the limit of turnover is ₹ 75 Lakhs in the preceding financial year) he contravenes eligibility criteria or any of the conditions of the scheme 11. Withdrawal from the composition levy scheme and procedure thereafter. A registered person who intends to withdraw from the scheme has to file an intimation for withdrawal from the scheme in the FORM GST CMP-04, before the date of such withdrawal. A registered person who ceases to satisfy any provision of the sch

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e In the scenario, when the proper officer has reason to believe that the registered person has wrongly opted for the scheme or he has contravened the provisions of the scheme, then he will seek a reply by issuing a show cause notice to such person in the FORM GST CMP-05. This notice is to be replied within 15 days of receipt of the same. Thereafter within 30 days of receipt of reply, officer has to issue an order in FORM GST CMP-07, either accepting the reply or denying the option to pay tax under the scheme. Subsequently the registered person who has been denied the option to pay tax under the scheme has to forward a statement in FORM GST ITC-01 containing details of the stock of the inputs and inputs contained in semi-finished or finished goods held in stock by him on the date on which the option is denied. The said statement has to be submitted on the common portal within 30 days from the date of denial order passed in the FORM GST CMP-07. The delinquent taxpayer will be liable to

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