Section
10
Who can opt for composition levy
A
registered person, whose aggregate turnover in the preceding financial year did
not exceed fifty lakh rupees"
The
said limit of fifty lakh could be increased upto one crore rupees
Government
vide Notification No. 8/2017 CT dated 27.06.2017 has increased limit to Rs. 75
lakh
In
respect of the following special category states, the aggregate turnover limit
is Rs. 50 lakh
Arunachal
Pradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Sikkim
Tripura
Himachal
Pradesh
In
case of Uttarakhand and Jammu and Kashmir, the turnover limit will
be Rs.75 lakh."
How to calculate the aggregate turnover
Include
the following:
a Taxable supplies
b Exempt supplies
c Inter-state supplies
d Exports
Exclude
a CGST
b SGST
c UTGST
d IGST
e Cess
f Value of inward supplies on which tax
is payable under reverse charge
How
to calculate the Turnover of person, who has more than one registration but
same PAN ?
It
shall be computed on All-India basis
At
what rates?
Not
exceeding
a)
1% of the turnover in case of a manufacturer
other
than manufacturers of ice cream, pan masala
and tobacco.
b)2.5%
of the turnover
in case of persons engaged in making supplies
referred to in clause (b) of paragraph 6 of Schedule II"
Schedule
II, Paragraph 6, Clause (b) : Supply as part of service of foods or drinks for
human consumption
c)
0.5% of the turnover in case of other suppliers
Intimation for opting for composition
levy
In
case of a person applying for registration
At
the time of applying for registration in Form GST REG-01, the applicant will be
given an option to pay tax under composition levy in Part B of the form.
In
case of a person who is already registered
a)
The person shall file an application in the prescribed form, before the commencement
of the Financial year
b) He
shall also furnish a statement in the prescribed form, within 60 days from the
commencement of the relevant Financial year
c) shall
be deemed to be an intimation in respect of all other places of business
registered on the same PAN
Details
of stock to be furnished
· The
details of
-
stock held by him on the day preceding
the date from which he opts for composition levy
has
to be furnished within 90 days from the date in which he opts for composition
levy or such extended period as given by the commissioner.
·
The option to pay tax under composition
levy shall be effective from the beginning of the FY.
Conditions and restrictions for
composition levy [Rule 5] :
a)He
shall be neither a casual taxable person nor a non-resident taxable person
b)the
goods held in stock by him have not been purchased from an unregistered
supplier and where purchased, he pays the tax under reverse charge under
section 9(4).
c)he
shall pay tax under section 9(3)/9(4) (reverse charge) on inward supply of
goods or services or both.
d)he
was not engaged in the manufacture of goods as notified under section 10(2)(e),
during the preceding FY. The following goods have been hereby notified vide
Notification No. 8/2017 CT dated 27.06.2017:
Ice
cream or other edible ice, whether or not containing cocoa
PAN
Masala
All
goods, i.e. Tobacco and manufactured tobacco substitutes"
e)
he shall mention the words “composition taxable person, not eligible to
collect tax on supplies” at the top of the bill of
supply issued by him"
f)
he shall mention the words “composition taxable person” on every notice
or signboard displayed at a prominent place at his
principal place of business and at every
additional place or places of business.
Who shall opt for this scheme? (Section
10(2))
a)
If he is not engaged in supply of services other than clause (b) of paragraph 6
of Schedule II - Supply of services as part of supply of food articles or
drinks
b)If
he is not engaged in making any supply of goods which are
not leviable to tax under this Act"
c)If
he is not engaged in making any inter-State outward supplies of goods
d)
he is not engaged in making supply of goods through an electronic commerce operator, who is required to
collect tax at source under section 52
e)
He is not a manufacturer of such goods as may be notified
f)
Where more than one registered person is having Same PAN,
all
registered persons should pay tax under composition scheme
in
order to be eligible under the scheme
Section 10(3)
When will the option of composition levy
will lapse
a)Once
the aggregate turnover in the financial year exceeds the limit prescribed
b)
If he fails to satisfy any of the conditions required to be satisfied under
rule 5
Once the person ceases to pay tax under
the composition levy scheme…
a)
He shall issue tax invoice on every taxable supply thereafter
b)He
is required to file an intimation for withdrawal from the scheme
in prescribed form within 7 days of the occurrence
of such event.
He
becomes eligible to take ITC under the normal tax scheme
However,
such person shall be allowed to avail the input tax credit in respect of the
stock of inputs and inputs contained in semi-finished or finished goods held in
stock by him and on capital goods held by him on the date of withdrawal and
furnish a statement, within 30 days of withdrawal of the option, containing the
details of such stock held in prescribed form on the common portal.
The person who opts this scheme shall
not… (Section 10(4))
a)
Collect tax from recipient of his supplies
b)take
input tax credit
Contravention
a)If
a non-eligible person pays tax under the scheme
he shall pay the tax payable under normal
scheme
be liable to penalty
The provisions of section 73 and 74 shall
apply for determination of tax and penalty
b.)
If proper officer has reason to believe
that he contravened the provisions, he may issue show cause notice
c.)
Upon receipt of reply to showcause notice, the proper officer can pass an order
accepting or denying option to pass tax under composition scheme.
