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Guidelines on composition and levy on directives/instructions regarding migration.
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....* 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 CGST/HGST Act, 2017. (Notification no. 38/ST-2, dated 30.06.2017] For example:- 1) A lottery distributor shall have to pay tax on reverse charge basis in respec....
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....f 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, 2017); * making inter-state supplies of goods (Ref: Section 10(2)(c) of the CGST/HGST Act, 2017); * making supplies through electronic commerce operator (Ref: Section 10(2)(d) of the CGST/HGST Act, 2017), * being manufacturer of any notified goods (notification no. 34/ST-2, dated 30.....
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....rough 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 Quarterly basis in FORM GSTR-4 (Ref: Section 39 (2) of CGST/HGST Act, 2017 and Rule 62 of GST Return Rules). * Return to be filed by 18th day after the end of each quarter [by 18th April, 18th July, 18th Oct., and 18th January] (Ref: section 39 (2) of CGST/HGST Act, 2017). * Annual Return to be filed in FORM GSTR-9A on or before the thirty-first day of December foll....
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....inted 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 year. [4 quarterly returns + one annual return]. 13 returns to be filed in a year. [12 monthly returns under Section 39* + One annual return (under Section 44* denotes CGST/HGST Act, 2017]. Inter-state outward supplies Not allowed Allowed Inter-state inward supplies Allowed Allowed Supply of services Not allowed except supply of food/drinks (other than alcoholic drinks) i.e. only restaurant, caterer service allowed. No such restriction Document to be issued Bill of supply Tax Invoice Other important Points: * Government is empowered to increase the limit of Rs. 75 lakhs limit t....
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....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 COMPOSITION LEVY UNDER GST Q1. What is the composition levy under GST Act? Ans. The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 Lakh (Rs.50 Lakh in case special category States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate. [Section 10 of CGST/HGST 2017] Q2. What is the specified rate of composition levy? Sr. No. Category of Registered person Rate of tax 1. Manufacturers, other than manufacture....
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....s, 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 pay tax under composition scheme lapses from the day on which his aggregate turnover during the financial year exceeds the specified limit (Rs.75 lakh/Rs.50 lakh). He is required to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed. 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 containing the details of such stock held, in FORM GST ITC-01 on the common portal. [Section 10(3) of CGST/HGST Act, 2017] Q7. How will the aggregate turnover be computed for the purpose of composition? Ans. Aggregate turnov....
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....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 intimation is to be filed electronically in FORM GST CMP-01 or FORM GST CMP-02. Q15. A person registered under existing law (Central Excise/service Tax/VAT) and who has been granted registration on a provisional basis wants to opt for composition scheme. How and when can he do that? Ans. Such a person has to electronically file a duly signed/verified intimation in FORM GST CMP-01, on the common portal, prior to 22nc June, 2017 or such further period as may be allowed by the Commissioner. Q16. What are the other compliances which a provisionally registered person opting to pay tax under the composition levy need to make? Ans. Such person is required to furnish the details of stock, including the inward supply of goods received from unregistered person, held by him on the day preceding the date from which he opts to pay lax under the composition scheme, electronically, in....
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....ent 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 intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under section 18(4) of the CGST/HGST Act, 2017 within a period of sixty days from the commencement of the relevant financial year. Q21. In case a person has registration in multiple states, can he opt for payment of tax under composition levy only in one state and not in other state? Ans. The option to pay tax under composition scheme will have to be exercised for all States. Q22. What is the effective date of composition levy? Ans. There can be three situations: Situation Effective date of composition levy Persons who have been granted provisional registration and who opt for composition levy (Intimation under Rule 3(1)). The appointed date is 22nd June, 2017 Persons opting for composition levy at the time of making application for ne....
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....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 CMP-07 within a period of thirty days of the receipt of such reply, either accepting the reply, or denying the option to pay tax under the composition scheme from the date of the option or from the date of the event concerning such contravention, as the case may be, Q27. In case the option to pay tax under composition levy is denied by the proper officer, can the person avail ITC on stock after denial? Ans. Yes, ITC can be availed by filing 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 denied as per order in FORM GST CMP-07, within a period of thirty days from the order. Q28. Will withdrawal intimation in any one place be applicable to all places of business? Ans. Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union Territory shall be....
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....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 of their purchases in their quarterly return itself, most of which will be auto-populated. Q36. Can composition scheme be availed of by a manufacturer? Ans. Yes. Manufacturer can opt for composition scheme but turnover should not be more than Rs. 75 Lakh (Rs.50 Lakh in case special category States). Tax shall be paid @ 2% on the turnover in the State. Q37. What is the scope of composition scheme under GST? Ans. Small taxpayers with an aggregate turnover in a preceding financial year up to Rs. 75 Lakh shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a state during the year without the benefit of ITC. A taxpayer opting for composition levy shall not collect any tax from his customers. Q38. Whether the composition scheme will be optional or compulsory? Ans. The composition scheme is optional and not compulsory. Q39. What returns are to be filed by registered person who has opted compos....
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.... 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 composition scheme, shall not be denied. (Ref: Rule 5 (4) of the CGST/HGST Rule, 2017) Q48. Is any order required by a proper officer for denial of option to pay tax under composition scheme? Ans. Yes. Upon receipt of the reply to the show cause notice issued under rule 6(4) from the registered person in FORM GST CMP-06, the proper officer shall issue an order in FORM GST CMP-07 within a period of thirty days of the receipt of such reply, either accepting the reply, or denying the option to pay tax under composition scheme from the date of the option or from the date of the event concerning such contravention, as the case may be, (Ref: Rule 6 (5) of the CGST/HGST Rule, 2017) Q49. I am a manufacturer of Ice cream and my turnover is Rs. 40 Lakh per year. Can I opt composition scheme under GST? Ans. No, Manufacturer of Ice cream and Tobacco products are not allowed to opt for composition scheme. Q50. I am a trader of footwear and my daily sale is between Rs. 6000 to 7000. Can I opt composition scheme und....
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.... 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 (as mentioned at Step 2 above) as on 1 July, 2017. Out of the successfully enrolled persons numbering 20653, 163039 persons have so far submitted application electronically in the form oi GST REG-26 duly signed or verified through electronic verification code. The proper Officer is required verify the application submitted by these persons in the form of GST REG-26 within period of 15 days if any deficiency is taken note of by the Proper Officer, a show cause notice in the of GST REG-27 can be issued within 15 days of submission of the application. If the Proper Officer fails to verity these applications within period of 15 days from the date of furnishing of information, the registration shall be deemed to have been granted. In case any tax evasion or non-compliance of the GST law is detected, the follow up action may be initiated immediately as per the provisions of the GST law. On an average 780 applications in the form of REG-26 are required to be verified by each ETO. Therefore, all the ETOS are required to start verifying the....
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....crowding of the system does not take place when the filing of returns under GST commences in September, 3. Data of Migrated Erstwhile Service Taxpayers. Goods and Services Tax provides for levy of tax on supply of goods or services or both. Erstwhile registered taxable persons paying tax under service tax are also required to get themselves migrated to GST. Though process of migration of these taxpayers is being looked after by CBFC, these taxpayers will be distributed amongst various wards like erstwhile VAT dealers. Excise & Taxation Officer have jurisdiction over such taxpayers falling in his ward just like VAT dealers. Thus each officer should monitor taxpayers predominantly engaged in supply of services falling in his ward. Excise & Taxation Officers are further called upon to engage with their counterparts in CBEC and other officers for better understanding of the subject. Ward-wise Report of the dealers registered under the VAT not enrolled under GST District Ward S.No. Name of the person/Dealer TIN (as per VAT) GTO for the year 2016-2017 Date of Visit to person/dealer Whether functional or closed (F or C) Whether Taxable Stocks under GST available (Yes or No) ....