Today we are discussing a very basic topic
of gst and it is also important for the small trader. who are not Handel paper
work .it is “composition Scheme”
What is composition scheme?
The Composition scheme is a very simple, (hassle)
difficulty free compliance scheme for small taxpayers. It is a voluntary and
optional scheme.
Persons who are not eligible for the scheme.
Few exceptions, a registered taxable person
whose” aggregate turnover” has not exceeded Rs. One crore (Rs. 75 lakhs for
special category states except J & K and Uttrakhand) in the last financial
year are eligible to opt for this scheme.
List
of taxable persons who are not eligible for the scheme is as below:
i.
A person who occasionally
undertakes supplies in a State or Union Territory where he has no fixed place
of business. i.e. a casual taxable person
ii.
A person who occasionally
undertakes supplies but has no fixed place of business or non-residence of
India. i.e. a non-resident Taxable person
iii.
A person who is engaged in a
business supply 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 agent or principal outside the State
where registration under the Composition Scheme has been taken.
viii.
The goods held in stock by him have not been purchased
from an unregistered supplier and where purchased, he pays the tax under the
reverse charge mechanism.
ix.
A person engaged in manufacturing of goods
notified under sec 10 (2) (e) of the CGST Act either in the year 2016-17 or
later. Following goods have been notified for which composition scheme is not
available.
Method to
calculate Aggregate Turnover
Aggregate turnover is computed on all India
basis for a person having same Permanent Account Number (PAN).
It is sum of value of all outward supplies
falling in the following four categories:
• Taxable supplies
•
Exempt supplies
• Exports of goods or services or both
• Inter-state supplies, but excludes
• The value of inward supplies on which tax
is payable by a person on reverse charge basis
• Taxes including cess paid under GST law.
Rate of tax is apply on the person who opt composition
scheme
Please use the chart below to understand the tax rate on
turnover applicable:
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.
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 notice board or signboard displayed at the prominent place at
his every place of business.
• Where ever a person, registered under any
of the existing laws, and who has been given provisional registration, gives an
intimation for the composition scheme, he shall not be allowed the composition
scheme in case the goods held in stock by him on the appointed day have 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 agent or principal outside the State.
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