Revised GST Law has proposed a GST composition scheme for small businesses to help them with maintaining minimal compliance. The small taxpayer can opt for the scheme of composition tax instead of opting for paying tax under the regular supply of goods. By opting the composition tax scheme, one can save himself from all the hassle of exhaustive provision of GST Law.

SALIENT FEATURES

Only taxable persons whose ‘aggregate turnover’ does not exceed Rs.50 Lakhs in a financial year will be eligible to opt for payment of tax under the composition scheme.

Rate of tax shall be the rate as prescribed, but not less than 1% of the turnover during the Financial year. Tax rates under the scheme are expected to be between 1% and 3%.

Tax payment under this scheme is an option available to the registered taxable person.

Taxpayer who are already a part of VAT composition scheme also need to voluntarily register for this scheme.

As per section 16, Goods and /or service on which composition tax has been pain under section 8 is not eligible for input tax credit.

Applicable only for intra-state supplies (i.e. local supplies within a state). The registered taxable person making inter-state of goods and /or services cannot take benefits under this scheme).

Taxpayer s registered under this scheme need to present bill of supply.

If a taxable person is found not eligible for this scheme then the tax authorities can impose a penalty equal to the amount of tax on such person along with his tax liability. So utmost care needs to be taken when opting for this scheme and paying taxes.

Scheme can not be allowed to the following taxable person.

• Who is engaged in the supply of service.

• Person who makes supply of goods those are not leviable to tax.

• Who make interstate outward supply of goods.

• Who make supply of any good through electronic commerce operator who is required to collect tax at source/s 56

• Who is manufacturer of such goods notified by the council.

This provision will be allowed to RTP only when all registered taxable person under the same PAN opt to follow the same scheme.

• Permission granted to RTP shall be withdrawn on the day when his turnover exceeds Rs.50 lakhs during financial year.

• Person opted under sub section-1, cannot collect the composition tax from recipient on supplies and cannot take input tax credit.

• Proper officer if noticed that RTP is not eligible for composition tax under sub section-1, ask such person to pay penalty in addition to tax due and may apply the provision of sec.66 and 67.