GST – COMPOSITION LEVY
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 6-4-2017
Composition levy
The term 'composition levy' has not been defined in Central Goods and Services Tax Bill, 2017 ('Bill' for short). Section 10 of the Bill provides for the composition levy. Section 10(1) provides that notwithstanding anything to the contrary contained in this Act but subject to the provisions of Section 9(3) and 9(4) of the Bill (Dealing with reverse charge mechanism), a registered person may opt to pay, in lieu of GST payable by him, if his aggregate turnover in the preceding financial year did not exceed ₹ 50 lakhs. The Government may increase the above said limit to ₹ 1 crore on the recommendation of GST Council.
Aggregate turnover
Section 2(6) of the Bill defines the term 'aggregate turnover' as the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis
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s are having the same PAN, the registered person shall not be eligible to opt unless such registered persons opt to pay tax under this scheme.
Lapse of option
Section 10(3) provides that the option availed by a registered person shall lapse with effect from the day on which the aggregate turnover during a financial year exceeds ₹ 50 lakhs.
Rate for composition levy
Section 10(1) of the Bill reads with Rule 5 of Composition Rules provides that the category of registered persons, eligible for composition of levy and the specified rate as detailed below-
* Manufacturers, other than manufacturers of such goods as may be notified by the Government – 1%;
* Suppliers making supplies referred to para 6 (b) of Schedule II – 2.5%;
* Any other supplier eligible for composition of levy under Section 10 and the rules – 0.5%
Section 10(1) provides that the an eligible registered person may opt to pay an amount calculated at the above rate but not exceeding-
* 1% of the turnover in
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he shall pay tax under Section 9(3) or 9(4) on inward supply of goods or services or both received from un-registered person;
* he was not engaged in the manufacture of goods as notified in Section 10(2)(e) during the preceding financial year.
Section 10(4) provides that a taxable person, who opts this scheme, shall not collect any tax from the recipient on supplies made by him nor shall be entitled to any credit of input tax.
Intimation of option
Rule 1 makes an obligation to the person who opt composition levy to intimate the same in the prescribed form.
Rule 1(1) provides that any person who has been granted registration on a provisional basis shall electronically file intimation in Form GST CMP – 01, duly signed, on the common portal prior to the appointed day, but not later than 30 days after the said day. Such period may be extended by the Commissioner in this behalf. Where the intimation is filed after the appointed day, the registered person shall not collect any tax fr
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Rule 1(1) or Rule 1(3) in respect of any place of business in any State or Union territory shall be deemed to be intimation in respect of all other places of business registered on the same PAN.
Stock details
Rule 1(4) provides that any person who files an intimation to pay tax shall furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the said section, electronically in Form GST CMP – 03, on the common portal, within 60 days of the date from which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf.
Effective date
Rule 2(1) provides that the option to pay shall be effective from the beginning of the financial year, where the intimation is filed under Rule 1(3) and the appointed date where intimation is filed under Rule 1(1). The intimation shall be considered only after grant of
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e show cause notice in Form GST CMP – 06, the proper officer shall issue an order in Form GST CMP 07 within 30 days of receipt of such reply, either accepting the reply or denying the option to pay tax under composition levy from the date of option or from the date of the event concerning such contravention, as the case may be.
Such person shall electronically furnish at the common portal, a statement in Form GST ITC 01 containing the details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date on which the option is withdrawn or denied, within 30 days from the date from which the option is withdrawn or from the order passed in GSTCMP 07.
Any intimation for withdrawal or denial of the option in respect of any place of business in any State or Union territory shall be deemed to be intimation in respect of all other places of business registered on the same PAN.
Penalty
Section 10(5) provides that if the proper officer has re
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ing all conditions). During 2nd year 2018-19, his turnover crosses 50 lakhs (say in December 2018) and he comes out of composition levy for remaining period. In 3rd year 2019-20, his turnover again falls below 50 lakhs. Can he opt for composition levy for 4th year 2020-21 based on the condition of previous year i.e. 2019-20 turnover below ₹ 50 lakhs?
Dated: 7-4-2017
Reply By MARIAPPAN GOVINDARAJAN as =
The point raised both of the experts are to be clarified by the Government.
Dated: 7-4-2017
Reply By CA.LALIT MUNOYAT as =
Well so far as the rates are concerned, they would be double considering both CGST & SGST Act. This has been clarified by the Government.
Secondly so far as the eligibility condition is concerned, he would be eligible for the 4th year 2020-21 based on the condition of previous year i.e. 2019-20 turnover below ₹ 50 lakhs?. This is clear from the language of the section itself.
Dated: 7-4-2017
Scholarly articles for knowledge sharing by authors,
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