SMALL BUSINESSES UNDER GST (PART-II) (Composition Scheme)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 1-3-2017<\/p>\n
Composition Levy
\nComposition 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.
\nUnder 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).
\nUnder GST regime, 'aggregate turnover' includes the aggregate value of-
\n * all taxable supplies,
\n * exempt supplies,
\n * exports of goods and\/or services and
\n * inter-State supplies of a person having the same PAN,
\n to be computed on an all India basis\n<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ver limit of ₹ 50 lakh. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n opt for composition) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" SMALL BUSINESSES UNDER GST (PART-II) (Composition Scheme)By: – Dr. Sanjiv Agarwal Goods and Services Tax – GSTDated:- 1-3-2017 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. … Continue reading “SMALL BUSINESSES UNDER GST (PART-II) (Composition Scheme)”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-2197","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/2197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2197"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/2197\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nExample
\nMr. A, a taxable supplier supplied goods 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.
\nIn 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.
\nRegistration under Composition
\nRegistration 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 ₹<\/p>\n
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\nComposition scheme only for supply of goods
\nSection 9 of the Model GST Law (version-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.
\nFor 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 abatem<\/p>\n
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