Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 1-3-2017 Last Replied Date:- 5-3-2017 – Composition Levy Composition levy has been in vogue in indirect taxes to address the compliance issues vis-a-vis revenue in case of small business units or specific business units having complexity in determination of valuation of taxable amount. Under GST regime, there is also a concept of composition levy. An alternate levy for small businesses, whose aggregate turnover in financial year doesn't exceed ₹ 50 lakh, composition levy in lieu of tax will be payable at a rate not less than 2.5 per cent in case of manufacturer and 1 per cent for others (basically traders). Under GST regime, 'aggregate turnover' includes the aggregate value of- all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on an all India basis However, following amounts will be excluded – Taxes, if any,
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oods valuing ₹ 30 lakh. He also supplied exempt goods valuing ₹ 10 lakh. He also supplied goods in inter-State valuing ₹ 10 lakh. During this period, Mr. A returned goods valuing ₹ 5 lakh to the supplier from whom he had received such goods. In this case, the outward turnover of A would be ₹ 55 lacs (30 + 10 + 10 + 5). Whereas his aggregate turnover would be ₹ 50 lacs i.e ₹ 55 lacs – ₹ 5 lacs. Registration under Composition Registration as taxable person is compulsory to opt for the scheme. Minimum exemption limit under GST will be ₹ 20 lakh and for special category states (north eastern and hill States), it will be ₹ 10 lakh. Further, composition levy is to be applied on an all India basis as per PAN. It would mean that all the registrations across India belonging to same PAN shall have to avail the scheme. If the aggregate turnover exceeds ₹ 50 lakh, the scheme will be deemed to be withdrawn. Restrictions for the Compo
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II) specifically allowed the composition scheme only to supply of goods and not services. It may be noted that as per Schedule II, all the supplies effected as works contract (including real estate, construction contracts) would be regarded as services and not goods. For the small dealers in majority of states who are already operating within the existing turnover limit of ₹ 50 lakh, the impact may not be much. Assessees may find composition scheme beneficial where turnover is upto ₹ 50 lakh. However, turnover includes exempt turnover and exports. It is not taxable turnover. Business with multi-State business under the same PAN may find it difficult to compute aggregate turnover correctly. Works contracts shall be treated as services in GST and as such, will not be allowed composition levy whereas presently, works contracts are allowed composition under VAT and abatement under Service Tax law. (To be continued……) – Reply By Ganeshan Kalyani – The Reply = Composition sch
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