Changes in GST Composition Levy w.e.f.

1st April, 2019

A. GST Composition Scheme Provisions Before 1st April 2019:-

i. The threshold turnover limit

 For Trader, Manufacturer – Rs. 1 Crore

 For Restaurant Service Only – 1 Crore

ii. Rate of Tax under GST Composition Scheme

 For Trader, Manufacturer – 1%

 For Restaurant Service– 5%.

iii. For Services, other than restaurant scheme –No composition scheme

iv. However, Trader/Manufacturer can provide services to the extent of ten

percent of turnover subject to maximum Rs. 5 lacs

B. GST Composition Scheme Provisions after 1st April 2019:-

i. The threshold turnover limit

 For Trader, Manufacturer – 1.5 Crore

 For Restaurant Service – 1.5 Crore

 The Threshold limit in any of the following States, namely: (i)

Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v)
Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand is Rs.75 lakhs.

ii. The Rate of GST under composition scheme-

 For Trader, Manufacturer –1% (5% CGST plus 0.5% SGST)

 For Restaurant Service – 5% (2.5% CGST plus 2.5% SGST)

 For Other Service Providers whose turnover in the preceding

Financial Year Rs. 50 lakhs – 6% (3% CGST & 3% SGST)

C. Applicability of GST Composition Scheme-

 Not engaged in making any supply which is not leviable to tax under
the CGST Act.
 Not engaged in making any inter state outward supply.

 Neither a Casual Taxable Person nor a Non Resident Taxable Person

 Not engaged in making any supply through an e-commerce operator

who is required to collect tax at source under section 52

 Shall not collect any tax from the recipient on supplies made by him
nor shall be entitled to any credit of ITC

 Shall issue Bill of Supply instead of Tax Invoice.

 Composition dealer is not eligible to collect tax on supplies

  The composition taxpayer will file GSTR-4.

D. Composition Scheme for 2019-20

The registered persons need to file GST CMP 02 viz Intimation to opt for
composition scheme- before 31st March 2019, the deadline, to opt in for
Composition levy for FY 2019-20

E. Notifications on Composition Scheme

i. Notification No. 2/2019-Central Tax (Rate) dated 7 th March, 2019

 First supplies of goods or services or both up to an aggregate turnover

of fifty lakh rupees made on or after the 1st day of April in any
financial year, by a registered person Shall be liable to pay central tax
at the rate of three percent on all outward supplies (Total 6%)
 The CGST Rules, 2017, as applicable to a person paying tax under
section 10 of the said Act shall, mutatis mutandis, apply to a person
paying tax under this notification.

 Conditions:

 Not engaged in making any supply which is not leviable to tax under
the CGST Act

 Not engaged in making any inter-State outward supply

 Neither a casual taxable person nor a non-resident taxable person

 Not engaged in making any supply through an electronic commerce

operator who is required to collect tax at source under section 52

 Shall not collect any tax from the recipient on supplies made by him
nor shall he be entitled to any credit of input tax.

 Shall issue, instead of tax invoice, a bill of supply as referred to in

section 31(3)(c) of the CGST Act with particulars as prescribed in rule
49 of CGST Rules.

 The registered person shall mention the following words at the top of
the bill of supply, namely: – ‘taxable person paying tax in terms of
notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not
eligible to collect tax on supplies’.

 Shall be liable to pay central tax on inward supplies on which he is

liable to pay tax under Section 9(3) or 9(4) of CGST Act at the
applicable rates.

Explanation:

“First supplies of goods or services or both” shall, for the purposes of

determining eligibility of a person to pay tax under this notification, include
the supplies from the first day of April of a financial year to the date from
which he becomes liable for registration under the said Act but for the
purpose of determination of tax payable under this notification shall not
include the supplies from the first day of April of a financial year to the date
from which he becomes liable for registration under the Act.

ii. Removal of Difficulty Order No. 3/2019-Central Tax dated 8th March,
2019

 The provisions of Section 31(3)(c) of the CGST Act, 2017 shall apply to
a person paying tax under Notification No. 2/2019-Central Tax
(Rate) dated 07.03.2019 (Composition Scheme for Services)
 Section 31(3)(c) provides for issue of bill of supply by composition
taxpayers. Thus, instead of a tax invoice, a bill of supply will be issued
by a person opting for composition scheme for services.

iii. Notification No. 9/2019-Central Tax (Rate) dated 29th March, 2019

Where any registered person who has availed of input tax credit opts to pay
tax under this notification, he shall pay an amount, by way of debit in the
electronic credit ledger or electronic cash ledger, equivalent to the credit of
input tax in respect of inputs held in stock and inputs contained in semi-
finished or finished goods held in stock and on capital goods as if the supply
made under this notification attracts the provisions of section 18(4) of the
said Act and the rules made there-under and after payment of such amount,
the balance of input tax credit, if any, lying in his electronic credit ledger
shall lapse.

Key Changes in Income Tax and GST which will be effective from 1st April
2019 Interim Budget was presented by the Finance Minister in February
2019. The Interim Budget 2019 introduced changes in income tax rules to
offer relief to small taxpayers and to the owners of residential properties.
There are many changes which will take place in GST as well from 1st April
2019. Let’s take a quick look at the key changes from Income Tax and GST
perspective, which will be effective from 1st April 2019. Key Changes in
Income Tax and GST which will be effective from 1st April 2019

1.) Change in Tax rebate Rebate under Section 87A [FY 2018-19] : The
rebate was available to a resident individual if his total income does not
exceed Rs. 3,50,000. The amount of rebate is 100% of income-tax or Rs.
2,500, whichever is less. Rebate under Section 87A [FY 2019-20] : The
rebate is available to a resident individual if his total income does not exceed
Rs. 5,00,000. The amount of rebate is 100% of income-tax or Rs. 12,500,
whichever is less. The basic exemption limit and tax slabs applicable for
individuals earning total taxable income above Rs 5 lakh, is however
unchanged.

2.) Change in Standard Deduction Standard Deduction under Section 16 [FY

2018-19] : Standard Deduction of Rs. 40,000 was available to salaried
employees. Standard Deduction under Section 16 [FY 2019-20] : Standard
Deduction of Rs. 50,000 is available to salaried employees.

3.) New GST Rates and Rules for Housing Sector From April 1, 2019, for on-
going under-construction projects, developers and builders will have an
option either to charge the GST as per old rates, i.e., at 12 per cent (with
input tax credit) or new rates at 5 per cent (without input tax credit). In case
of affordable housing, such rates would be 8 per cent (with input tax credit)
or 1 per cent (without input tax credit).

4.) Taxation of House Property under concept of Deemed Rent As per Income
Tax Act you can claim only one property as self occupied property and other
property will be deemed to be let-out property and notional rental income
has to be calculated on the same which was taxable under income tax act.
One of the changes which has been introduced from FY 2019-20 is that the
taxpayer can now claim two properties as self occupied property and
therefore no notional rent would be calculated on the same.

5.) Capital Gain from sale of House Property As per Income Tax Act taxpayer
can claim exemption from capital gain on sale of house property if the
proceed of sale is invested by him to purchase/construct one house property
subject to certain limitations. From FY 2019-20 and onwards, taxpayer can
claim exemption from capital gain on sale of house property if the proceed of
sale is invested by him to purchase/construct upto 2 house properties
subject to limitation that: 1.) the long-term capital gains from sale of such
house property shall not exceed Rs 2 crore, and 2.) the benefit can be
claimed only once in the taxpayer’s lifetime.

6.) Introduction of Composition Scheme for Service provider Interested and

Eligible taxpayer can opt for Composition Scheme for Service Provider with
effect from 1st April 2019.

7.) Increase in threshhold limit for a composition dealer The threshold limit
for opting for composition scheme has been increased to 1.5 Crores with
effect from 1st April 2019

8.) Increase in threshhold limit GST Registration The threshold limit for
taking GST registration has been increased to 40 Lakhs for supplier of
Goods with effect from 1st April 2019

9.) Increase TDS limit for bank interest and Rent Interest Limit for
Deduction of Tax as per section 194A has been increased to 40,000 in FY
2019-20 from 10,000 in FY 2018-19. Rent Limit for Deduction of Tax as per
section 194I has been increased to 2,40,000 in FY 2019-20 from 1,80,000 in
FY 2018-19.

10.) Relief on use of GST Input Tax Credit for Payment of Tax Government
has eased cash flow concerns with relaxations in ITC setoff mechanism vide
Notification 16/2019 – Central Tax by inserting Rule 88A With this change,
businesses still have to set off IGST liability first. But now, the Government
has allowed businesses to utilise the remainder of IGST credit to pay off
either of CGST or SGST liabilities at their discretion.

11.) New GST Returns Deferred Earlier the new GST returns were to be
introduced by government on pilot basis from 1st April 2019 and the same
was to be made compulsory with effect from 1st July 2019. The same has
been deffered for now and the same would be applicable when announced.