TaxTMI 
TaxTMI 
Guidelines on composition and levy on directives/instructions regarding migration.
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....ST/HGST Act, 2017- Furnishing of Return by Taxable Person under Composition levy. * GST Composition Rules (Rule 3 to 7). Relevant Definitions: Term (Reference section) • Aggregate Turnover: (Section 2(6) of CGST/HGST Act, 2017) • Turnover in state (Section 2 (112) of CGST/HGST Act, 2017) • Reverse Charge (section 2 (98) of the CCST/HGST Act, 2017) • Exempt supply (Section 2 (47) of the CGST/HGST Act, 2017) • Non-taxable supply (Section 2 (78) Of the CGST/HGST Act, 2017) Rates of Tax under Composition Scheme: As per section 10(1) of the CGST/HGST Act, 2017, read with Rule 7 of GST Composition Rules rates under composition scheme are as under: (i) 2% (1% CGST+1% SGST) of the turnover in the State in case of manufacturers. (ii) 5% (2.5% CGST+2.5% SGST) of the turnover in the State in case of food/restaurant services. (iii) 1% (0.5% CGST+0.5% SGST) of the turnover in the State in case of other suppliers (like traders/agents). Other tax liability to be discharged: • Any supply of goods/services on which tax is to be paid on reverse charge basis by the recipient (Ref: Section 9(3) of the....
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....ies" at the top of the bill of supply by him) (Ref: Rule 5(1)(f) of composition Rules) • He shall mention the words "composition taxable person" on ever/ notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business. (Ref: Rule 5(1)(g) of composition Rules) • He is not entitled to any Input Tax Credit (Ref: Section 10(4) of the CGST/HGST Act, 2017) • He cannot collect any tax from the recipient on supplies made by him (Ref: Section 10(4) of the CGST/HGST Act, 2017) Non-eligibility for Composition Scheme (Ref: Section 10 of CGST/HGST Act, 2017): The following taxable persons are not eligible for composition levy,- • engaged in supplies of services other than supply of goods, being food or any other article of human consumption or any drink (other than alcoholic liquor) {Ref: clause (b) of Paragraph 6 of Schedule II of CGST/HGST Act, 2017} i.e. supplies other than restaurants, caterers not eligible (Ref: Section 10(2)(a) of the CGST/HGST Act, 2017); • making supply of goods not leviable to CST (Ref: Section 10(2)(b) of the CGST/HGST Act, 2....
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....such contravention, as the case may be. (6) Every person who has furnished an intimation under sub-rule (2) or filed an application for withdrawal under sub-rule (3) or a person in respect of whom an order of withdrawal of option has been passed in FORM GST CMP-07 under sub-rule (5), may electronically furnish at the common portal, either directly or through a Facilitation Centre notified by the Commissioner, a statement in FORM GST ITC- 01 containing 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 a period of thirty days from the 4 date from which the option is withdrawn or from the date of the order passed in FORM GST CMP-07, as the case may be. (7) Any intimation or application for withdrawal under sub-rule (2) or (3) or denial of the option to pay tax under section 10 in accordance with sub-rule (5) in respect of any place of business in any State or Union territory, shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number. Filing of Return: • Return to be filed on Q....
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....r ten thousand rupees, whichever is higher in case of other than fraud cases. (Ref: Section 73(11) of the CGST/HGST Act, 2017) • Tax not paid or short paid of self-assessed tax by a dealer will, after proper service of notice, result in imposition of interest along with penalty of 50% of tax amount in case of fraud cases. (Ref: Section 74(11) of the CGST/HGST Act, 2017) Time of Exercising of option for Availing Composition Scheme (Ref: Rule 3 of GST composition rules) • Option to avail scheme prior to appointed day or within 30 days from the appointed day or • At the time of first registration. or • Prior to the beginning of financial year Comparison of Composition GST levy vs. Normal CST levy at a Glance Subject area Composition scheme Normal scheme Eligibility for Input tax credit Not eligible Eligible Filing of return Quarterly Monthly Collection of taxes from buyers Not allowed to collect tax from buyers. Allowed to collect tax paid or to be paid from buyers. Input tax credit by recipient of Supply Not allowed Allowed Compliance Burden 5 returns to be filed in a ye....
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....-01 on common portal prior to the appointed day or within 30 days. (B) Newly Registered Person (not registered under Existing law) exercising option at the time of obtaining registration (Ref: Rule 3(2) of GST composition Rules). • Any person who is not registered under the existing law, but intends to register either from appointed date or subsequent to that will have to make application in form GST-REG-1. He shall indicate the option of availing benefit of section 10. Such exercising of option in form GST REG-1 shall be considered as intimation to pay tax under the said section as provided in rule 3(2) of GST Composition Rules. (C). Registered Person opting composition scheme u/s 10 after obtaining registration (Ref: Rule 3(3) of GST Composition Rules). • Any other registered person who wants to opt for payment of tax under section 10 shall electronically file intimation in FORM GST CMP-02 duly signed in common portal prior to commencement of the financial year for which the option to pav tax under section is exercised. [The term "existing law" has been defined under Section 2(48) of the CGST/HGST Act, 2017] FREQUENTLY ASKED QUESTIONS ON COMP....
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....plying goods which are not taxable under GST law; f) suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52 and; g) a manufacturer of following goods: Sr. No. Classification (Tariff item/Chapter) Description of Goods 1. 2105 00 00 Ice cream and other edible ice, whether or not containing cocoa 2. 2106 91 20 Pan Masala 3. 24 Tobacco and manufactured tobacco substitute [Section 10(2) read with Rule 5 of CCST/HGST Act, Notification 34/ST.2, dt. 30.06.2017] Q5. When will a person opting for composition Ivey pay tax? Ans. A person opting for composition levy will have to pay tax on quarterly basis before 18^th of the month succeeding the quarter during which the supplies were made. [Rule 62 of CGST/HGST Rules, 2017] Q6. A person availing composition scheme during a financial year crosses the turnover of Rs. 75 lakh/50 lakh during the course of the year i.e. say he crosses the turnover of Rs. 7S lakh/50 lakh in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March? Ans. No. The option to p....
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....mon portal by the 18th of the month succeeding the quarter. For example, return in respect of supplies made during July, 2017 to September, 2017 is required to be filed by 18th October 2017, [Rule 62 of CGST/HGST Rule 2017] Q12. What is the basic information that needs to be furnished in GSTR-4? Ans. It would contain details of the turnover in the State or Union Territory, inward supplies of goods or services or both and tax payable. Q13. A person opting to pay tax under the composition scheme receives input/input services from an unregistered person. Will the composition taxpayer have to pay GST under reverse charge? If yes, in what manner? Ans. Yes. Tax will have to be paid on such supplies by the composition taxpayer under reverse charge mechanism. The tax can be paid by the 18tn day of the month succeeding the quarter in which such supplies were received. The information relating to such supplies should be shown by the composition taxpayer in Table 4 of return in FORM GSTR-4. [Rule 62(3) of CGST/HGST Rule 2017] Q14. What is the form in which an intimation for payment of tax under composition scheme needs to be made by the taxable person? Ans. The intimat....
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....e date of exercise of option. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs. In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the input tax credit involved in the remaining useful life in months Shall be computed on pro-rate basis, taking the useful life as 5 years. Assume capital goads have been in use for 4 years, 6 months and 15 days, The useful remaining life in months will be 5 months ignoring The part of the month. If ITC on such capital goods is taken as C, ITC attributable to the remaining useful life will be C multiplied by 5/60, This be the amount payable on capital goods. The ITC amount shall be determined separately for integrated tax, central tax and state tax/union territory tax. The payment can be made debiting electronic credit ledger, if there is sufficient balance in said ledger, or by debiting electronic cash ledger. The balance, if any in the electronic credit ledger would lapse. Such person also have furnish the statement in FORM GST ITC-03 which is d declaration for intim....
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....istered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. Every person who has filed an application for withdrawal from the composition scheme, may electronically furnish, a statement in FORM GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date of Withdrawal, within a period of thirty days or withdrawal. Q26. What action can be taken by the proper officer for contravention of any provisions of composition levy and how? Ans. Where any contravention is observed by the proper officer wherein the registered person was not eligible to pay tax under the composition scheme or has contravened the provisions of the CGST/HGST Act, 2017 or provisions of Chapter II of the CGST/HGST Rules, 2017, he may issue a notice to such person in FORM GST CMP-05 to show cause within fifteen days of the receipt of such notice as to why the option to pay tax under the composition scheme shall not be denied. Upon receipt of the reply to the said show cause notice in FORM GST CMP-06, the proper officer shall issue an order in FORM GST C....
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....e to carry forward the excess ITC of VAT to GST, if he opts for composition scheme. Q33. Must a composition dealer maintain detailed records? Ans. No, a dealer registered under composition scheme is not required to maintain detailed records as in the case of a normal taxpayer. Q34. Is liability to pay taxes under the Reverse Charge Mechanism covered under the Composite Scheme ? Ans. Any tax payable under Reverse Charge Mechanism will not be covered under the scheme. These taxes will be liable to be paid as a normal taxpayer. Q35. Do tax payers under the composition scheme also need to file GSTR-1 and GSTR-2? Ans. No. Composition tax payers do not need to file any statement of outward or inward supplies. They have to file a quarterly return in Form GSTR-4 by the 18^th of the month after the end of the quarter. Since they are not eligible for any input tax credit, there is no relevance of GSTR-2 for them and since the credit of tax paid under Composition Levy is not eligible, there is no relevance of GSTR-1 for them. In their return, they have to declare summary details of their outward supplies along with the details of tax payment. They also have to give details o....
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....ds from inter-state supplier and there is no restriction on any inward supply Q45. What is the fees/penalty to be paid in case of late filing of annual return under composition scheme? Ans. Fees to be paid in case of late filing of annual return @ one hundred rupees tor every day subject to maximum amount calculated at 0.25% of his turnover in the State. (Ref: Section 47(2) of the CGST/HGST Act, 2017) Q46. Can registered person under make an inward supply from the other state? Ans. Yes, a dealer under composition scheme is allowed to make an inward inter-state supply from the other state. However, outward supplies to the other state are not allowed to the dealer under composition scheme. Q47. is any notice required by a proper Officer denial of option to pay tax under composition scheme? Ans. Yes. Where the prover officer has reasons to believe that the registered person was not eligible to pay tax under composition scheme or has contravened the provisions of the Act or provisions of Chapter-II, he may issue a notice to such person in FORM GST CMP-05 to show cause within fifteen days of the receipt of such notice as to why the option to pay tax under compositio....
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....will have to upload an application in form of REG-26 and scanned images of specified documents duly signed by DSC or verified through electronic verification code within a period of three months from enrolment Step 4. Excise & Taxation Officer has to verify the application in form REG-26 within 15 days. In case the deficiency is detected, an online Show Cause Notice in the form of REG-27 can be issued within 15 days. If no action is taken within this prescribed time, the application shall be deemed verified. Step 5. Registration Certificate in the form of REG-06 duly signed by the officer shall be made available to the applicant and the process of migration shall be completed. 1. Migration of erstwhile Haryana VAT dealers The first essential requirement for previously registered taxable persons is to have a PAN as validated from CBDT data. Of all the registered persons under Haryana VAT as on the date preceding the appointed day under GST, PANs of total of 255408 persons have been validated. Provisions ID and password for all these persons have been received and forwarded. Out of 255408 persons, so far 206553 persons have logged in and completed the process or enrolment....
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....ver 2016-17 and, should start verification in each case in the order turnover. ETO in respect of each ward is required to conduct verification as to why they have failed to enrol themselves. The verification may include the following points:- 1) Any particular reason for non-enrolment stated by the person. 2) Whether the firm is functional, if yes, the firm liable to pay tax under GST. 3) Whether the firm has any stock of taxable goods 4) Whether the firm has discharged its liability of furnishing returns and payment of tax under VAT. 5) Whether the firm is conducting business in accordance with the GST provisions by charging and issuing proper tax invoices under GST. 6) Any other relevant matter or enquiry deemed fit. The process of verification must be completed in a week's time and a report to this effect is to be sent in the prescribed format. The format is attached herewith [Action point Proper Officer/DETC]. The target is to get these persons enrol themselves and submit their Information in REG-26 within July, so that the crowding of the system does not take place when the filing of returns under GST commences in September, 3. Data of Migrated E....