sale of exempt goods liable to tax for composition dealer

[prasanna Hegde]

whether composition dealer is required to pay tax on sale of exempted goods along with taxable goods @ 1% kindly inform

[Alkesh Jani]

Sir, in my point of view, Yes you are required to pay GST on each bill of supply. You are also required to pay tax in terms of Rules 5(*d) and (e) of the CGST Rules, 2017.

[KASTURI SETHI]

As per Section 10(1)(a) of CGST Act, 2017, the tax will be charged on one percent of the turnover in State or turnover in Union Territory in case of a manufacturer.

The definition of 'turnover' has been given in Clause (112) of Section 2 of the CGST Act. This cause is extracted below“

"Turnover in State” or “turnover in Union Territory” means 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) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union Territory by the said taxable person but excludes Central tax, State tax, Union Territory tax, Integrated tax and cess.

From the above it is very much clear that, one percent tax will also be levied/paid on the value of exempt supplies as well as export supplies.

[Ganeshan Kalyani]

I endorse the views of the experts .Thanks

[CASusheel Gupta]

Dear Prasanna Hegde

Section 10(1)(a) has to be read with amended Rule no. 7 (amended from 01.01.2018) and you need to pay tax @ 1% of the turnover of taxable supplies of goods in the State.

Regards

CA. Susheel Gupta

9811004443, 8510081001

[KASTURI SETHI]

I support the views of Sh.Sushil Gupta Ji, an expert.

AI Summary

Composition scheme turnover includes exempt supplies, affecting tax liability on mixed supplies under GST regime. The forum presents two operative positions: one that the composition scheme liability is computed on aggregate turnover, which includes exempt supplies so composition tax must be paid inclusive of exempt supplies on mixed bills; and a contrasting view that, following an amendment to the composition rules, the composition levy should be computed on the turnover of taxable supplies only.