4 COMPOSITION LEVY Ans: The provisions relating to Composition scheme under CGST Act, 2017 are discussed as under— @) Optional Scheme : Tax payment under this scheme is an option available to the taxable person. This scheme is available only to certain eligible taxable persons. (2) Eligibility - If aggregate turnover is upto € 1.5 crore/ % 75 lakh in preceding financial year [Section 10(1)] : A registered person, whose aggregate turnover in the preceding financial year did not exceed ¥ 1.5 crore, will be eligible to opt for payment of tax under the composition scheme. However, the aggregate turnover in the preceding financial year shall be € 75 lakh in the case of an eligible registered person, registered under Section 25 of the said Act, in any of the following States, name > Arunachal Pradesh, > Mizoram, > Nagaland, > Uttarakhand. “Aggregate turnover” means the aggregate value of - > all taxable supplies (exeluding the value of inward supplies on which tax is payable by a person on reverse charge basis), > exempt supplies, > exports of goods or services or both, and. > — inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis, but exclude: ‘Central tax, State tax, Union territory tax, Tntegrated tax, and Cess, [Section 2(6)] vVvVvVvGST : COMPOSITION LEVY 4.2 © CA. Yogendra Bangar & CA. Vandana Bangar staurant services: Primarily, the composition scheme available to the suppliers of goods and restaurant service, but composition suppliers are permitted £0 supply series uly a specified areal eralue in the year of opting for composition. It must be noted that a taxable reams pt for payment of taxes under composition scheme say for suPP'Y of class of goods and services ant opt for regular scheme of payment of taxes for supply of other classes of goods and services: (@) Rates of composite tax [Section 10(1)] : A composition supplier may opt {9 P= under section 9(1), an amount of tax calculated at under mentioned rates — {@) Scheme will be applicable for all goods and re in lieu of the tax payable by him 105% of the turnover in the |1% of the turnover in the Sate orUnion territory [State or Unionterritory __| State or Union territory @ | Restaurantservice |25%% of the tumover in the] 25% of the tumover in the |5% of the Fumove! in the State or Union territory _|State or Union territory _| State or Union territory } lOtherSuppliess [05% of the tumover of [05% of the turnover of|1% of the turnover of taxable supplies of goods | taxable supplies of goods | taxable supplies of goods and services in the State or | and services in the State or | and services in the State or Union territory Union territory Union territory Services can be supplied by the composition suppliers [Second Proviso to Section 10(1)] : A person who opts to pay tax under (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule Il ie. restaurant services), of value ~ (@) not exceeding 10% of turnover in a State or Union territory in the preceding financial year; or (b) %5,00,000, whichever is higher. ‘@) [Manufacturer 0.5% of the tumover in the ipply of Services provided by way of extending deposits, loans or adi os aoe =; Toans or advances Sera : pee te ee or discount shall not be taken into account for eae a nee His aggregate tumover in preceding FY is € 110 lakh, Since his aaareie fe fimorer in the preceding FY does not exceed € 1.5 crore, he is eligible for composition scheme in = current FY, ipply services [other than restaurant services] upto a value of not (2) 10% of €110 lakh, ie, %11 lakh OR (©) %5iakh, ‘whichever is higher. Thus, he can i she can supply services upto a value of € 11 lakh i in current FY. If the value of services supplied exceeds % 11 lakh, he ec eevee sistem becomes ineligible for the composition scheme and has to opt out of the out ofGST : COMPOSITION LEVY aN a 43 © (4) 6) @ (20) (1) (b) supplier of goods or services which are not taxable under the CGST Act/SGST Act/UTGST Act (@) an inter-State supplier of goods or services; (@)_person supplying goods or services through an electro: electronic commerce operator who is required to collect tax at source under Section 52; oa anal (@) manufacturer of certain notified goods; and (© casual taxable person or a non-resident taxable person. Ineligible Manufacturers [Amended by Notification No, 04/2022-CT w.ef. 1-4-2022] : The manufacturer of following goods will not be eligible to opt for composition scheme S| | Tariffitem, subheading, Description No. | _heading or Chapter a 2105 00.00 Tce cream and other edible ice, whether or not containing cocoa a 2106 9020 Pan masala 2A. 22021010 ‘Aerated Water _| 3 24 "All goods, ie. Tobacco and manufactured tobacco substitutes a 6815 Fly ash bricks or fly ash aggregate with 90% or more fly ash content; Fly ash blocks 5. (6901.00 10 Bricks of fossil meals or similar siliceous earths 6. 6904 10.00 Building bricks an {6905 10 00 Earthen or roofing tiles There is no restriction on Composition Supplier to procure goods from inter-State suppliers. “Applicable for all transactions of registered person with same PAN [Section 10(2)]: All egistered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If one registered person opts for normal scheme, others become ineligible for composition scheme. ‘Btampie: [fa taxable person has the following businesses separately registered — > Sale of footwear (Registered in Karnataka) > Sale of mobiles (Registered in Karnataka) a ‘Cale of ready-made garments (Registered in Rajasthan) athe above scenario, the composition scheme would be applicable forall the 3 unis, Taxable person will not be eligible to opt for composition scheme say for sale of footwear and sale of mobiles and opt to pay taxes under the regular scheme for Ready-made garments. if ag turnover exceeds 1.5 crore/ 75 lakh [Section 10(3)] : The benefit of composition Se ae aon i the aggregate turnover of © 5 crore/® 75 lakh in current financial year. The option aac of by a registered person under Section 101) shall lapse with effet from the day on which his aggregate turnover during a financial year exceeds the limit of 71.5 crore/%75 lakh. lected from Recipients [Section 10(4)]: A taxable person to whom the provisions of it to be Ce Some ee er 5 on supplies made by him. It means that a composition scheme applies shall not collect any tax from the recipient composition scheme supplier cannot issue a tax invoice. : ; Input tax credit cannot be Availed [Section 10(4)] : A taxable person to whom the provisions ‘of composition scheme applies shall not be entitled to any credit of input fa% Penal Consequences [Section 10(8) : If the proper officer has reas) © Eee a ae pt ea eo i. ‘under composition scheme despite not being eligible, such persor call in ation oan tx that may aaa by him under any other provisions of this Act, be liable 102 penalty and the provisions ion shall be applicable for determination of tax and penalty: ; $ chanism (RCM) : It tant ‘Composition scheme not applicable for tax payable under Reverse Charge Mec Re dis is impor techanism, the option of payment under this scheme will to note that for any tax payable under reverse charge ™m oa ee ane Hae of tax peyableion auppies able ‘under RCM will be regular rates and not composition rate.GST: COMPOSITION LEVY Bangar & CA. Vandana Bangae af © CA. Yogendtea sods from registered person who a mposition Tax : Customer who buys 8 pated nee (12) Customer not entitled to take credit of Composition Tax: Cusloniet NN OR ccause a COMP is under composition scheme is not eligible for composi supplier cannot issue a tax invoice. Turnover for composition fides jéton’ scheme © Mx, Zafar of Assam, prov ancial ed ‘You pe feel to find out the aggregate turnover f Mires thor he is eligible for composition levy levy scheme and determine whet TO Takis was in course of inter-state transactions), ak sens ‘interest on loans & advances), mn, whose aggregate turnover in the Soliaion: Section 10 of the CGST Act, 2017 provides that a registered perso ie aimee preceding financial year did not exceed % 1.5 crore (€ 75 lakh in Special Category States excep! Pradesh and Jammu and Kashmir), may opt to pay for composition seven emcee = , 2017, “Aggregate turnover” means fe valite of = a charge basis), > exempt supplies, > exports of goods or services or both, and > inler-State supplies A of persons having the same Permanent Account Number, to be computed on all India basis, but excludes ~ Central tax, State tax, Union territory tax, Integrated tax, and Coss. ‘According fo Explanation 1, "aggregate turnover" shall include the value of supplies made by such person from the 1" day of April of a financial year upto the date when he becomes liable for registration under this Act, but shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. ‘Thus, aggregate turnover shall be computed as under — Computation of Aggregate Turnover (amount in + Value of taxable outward supplies (out of above € 10 lakhs was in course of inter-state transactions) 50,00 000 Value of exempt supplies (Excluding ® 30 lakhs was received as a interest on loans & advances). 40,00,000 Value of inward supplies on which he is liable to pay tax under reverse charge (specifically excluded) - Value of exports (to be included) 5,00,000 Aggregate Turnover for composition scheme 35,00,000 Though his aggregate turnover does not exceed € 150 lakh, but since he is engaged in inter- i “Ee he ngaged in inter- state supply of goods, he is Solution: Section 10(1) of the CCST Act, 2017 provides that a registered preceding financial year did not exceed € 1.5 crore in the State of stab wil under the composition scheme. ‘ whose aggregate turnover in the be eligible to opt for payment of taxGST : COMPOSITION LEVY A. Yopendca Dagar & CA, Vandana Hang 45 According to Section 10(3), the benefit of com; J composition scheme can be Ey saa SL ae be availed up to the aggregate tumover ot ay on which his aggregate tumover during a financial yeat exceeds the limiter CLere em According to Explanation 2, for the purposes of determining, the tax payable by a per “f expresion turnover Slate or trnoverin Union triry shal ot in lade te valuc allowing supplies naa (supplies from the first day of April of a financial year upto the date whe see Bec eneriaiehce a late when such person becomes liable for (i) exempt supply of services provided by way of extendiny a en oe iy ok en ling deposits, loans or advances in so far as the consideration ‘Thus, Aapki Dukan is eligible to pay tax w is se aia ne igible to pay tax under this section upto the turnover of % 150 lakh. The total tax payable by itis Period Tax rate 2 E : Turnover @) | Tax liabili 1" Quarter Since turnover did not exceed € 40 lakh, it was not 40 lakh x q required to obtain registration. Hence, no tax was required to be paid 2 Quarter Effective rate is 1% (CGST+ SGST/UTGS)] under 45 lakh 45,000 : Section 10(1) {(65-40) lakh} For 3 Quarter Effective rate is 1% (CGST+ SGST/UTGST)] under 65 lakh 65,000 Section 10(1) upto ® 150 lakh [(050-85) lakh] For the month of| Normal rate of tax ive, 12% will be applicable 215 lakh 1,80,000 January 2022 [R (165 - 150) lakh) Total tax liability 2,90,000 Solution : @) A registered person, will be eligible to opt for payment of tax under the composition scheme. However, the aggregate turnover in the preceding financial year shal] be €75 lakh in the case of an eligible registered person, registered undies section 25 of the Pid Act in any of the following States, namely : > Arunachal Pradesh, » Manipur, > Meghalaya, > Mizoram, > Nagaland, > Sikkim, » Tripura > Uttarakhand. Since Sai trading Company is making intra state supplies in Andhra Pradesh, it will be cligi scheme. (di The tumover limit in Jammu and Kashmir is ® 1.5 erore, Hence Sai Trading company wil be eligible to opt for composition scheme with other condition of not ‘making inter State supplies of goods being fulfilled. ble to opt for composition yver in the des that a registered person, whose aggregate tumo 75 lakh in Special Category States except Assam, Himachal Solution : Section 10 of the CGST Act, 2017 prove receding financial year did not exceed % 15 crore ; Bade er Sate, fay opt to pay, angeuor te wearer BY Hey nara calculated at the specified rates, Hence Ginny and John Company cannot cP! for composition scheme aggregate turnover exceeds 1.5 crore.GST: COMPOSINIUN LEVY OCA. Yorendsa Bangar & CA. Vandana Banga: 4.6 In second case also though his aggregat supplying interior decorator services als of turnover ina State or Union territory in’ ‘As per Section 10(2), all registered persons iti .d person opts composition scheme. If one registered p “Thuis, he cannot opt for composition scheme only for showroom. opt for composition scheme as he jy ths, if he cannot opt opt ome If he opts for composition scheme, he con supply ae ing 10% ee ver is higher inthe receding financial year; or & 5,00,000, whichever n, i same Permanent Account Number (PAN) have ' opt for ee : vera scheme, others become ineligible for composition scheme. for nor were, o fe turnover is % 142 lak ition scheme is discussed as under - of the CGST Act, 2017, a registered person, engaged, year did not exceed % 1.5 crore, may opt to ‘Solution; The eligibility of Shubhlaxmi traders under composi > Hligiblity under Composition scheme : As per Section 10(1) 2 in trading of goods whose aggregate turnover in the preceding financial y pay, in liew ofthe tax payable by him, an amount calculated at the specified rates. ‘According to Explanation 1, "aggregate turnover" shall include the value of supplies made by such person from, the 1" day of April of a financial year upto the date when he becomes liable for registration under this Act, but “shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. ‘Thus, in computing his aggregate turnover in order to determine his eligibility for composition scheme, value of supply of any exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account. > Subhlaxmi traders is eligible for composition scheme : In the given case, the services provided by Shubhlaxmi traders apart from trading of goods, viz. services by way of extending deposits where the consideration is represented by way of interest shall not be taken into account for computation of aggregate turnover for determination of eligibility of composition scheme. Since the aggregate turnover of Shubhlaxmi traders do not exceed € 1.5 crores in preceding financial year, it shall be eligible to opt for composition scheme. > eel bas not eligible for composition scheme : However, if Shubhlaxmi traders is also engaged in ae it wll not be eligible for composition levy since only value of supply of exempt services by way of extending deposits, loans or advances in go far as the consideration is represented by way of interest or eae cal not be taken into account. Other exempt services shall be taken in . }over is €1.54 crores in preceding financial year it will not be eligible to opt for c ito account. Since its aggregate -omposition scheme. Solution: A registered person, whose aggregate turnover in the ‘may opt for payment of tax under Composition scheme, Preceding financial year did not exceed ¢ TeeGST: COMPOSITION LEVY © CA. Yogendra Bangar & CA. Vandana Bangar AT ‘As per Section 2(6) of the CGST Act, 2017, "Aggregate tumover” means the aggregate value of = > all taxable supplies (excluding th eaieen aie ae (excl 1g the value of inward supplies on which tax is payable by a person on reverse > exempt supplies, > _ exports of goods or services or both, and > interState supplies of persons having the same Permanent Account Number, to be computed on all India basis, but excludes ~ > Central tax, > State tax, > Union territory tax, > Integrated tax, and > Cess. According to Explanation 1, for the purposes of computing aggregate tumover of a person for determining his eligibility to pay fax under this section, the expression "aggregate tumover" shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. ‘Thus, aggregate turnover shall be computed as under — Computation of Aggregate Turnover (amount in 9: (@) Supplies made under forward charge 75,00,000 (@) Supplies made which are chargeable to GST at Nil rate (covered under exempt supply) 43,00,000 @) Supplies which are wholly exempt under Section 11 of CGST Act, 2017 32,00,000 (@ Value of exempt supply of services being interest earned on fixed deposits with bank Nil 6) Value of inward supplies on which tax payable under RCM (specifically excluded) Nil Total 1,50,00,000 Since, Aggregate turnover does not exceed € 1,50,00,000 during the Financial Year 2021-22, So, A Ltd. is entitled for Composition Scheme for Financial Year 2022-23. td. shall be as under— Solution: The composition tax liability of A L tax (amount in 3: (1) Computation of Aggregate Turnover and composite 30,00,000 18,00,000 6,00,000 5% GST (1) Intra State Supplies of Goods X chargeable @ able to GST at Nil rate (2) Intra State Supplies of goods which are charge (3) Intra State supply of services chargeable with 5% GST a (8) Interest earned on fixed deposits with banksGai 4.8 nae nents et arena icc: iT | 2, 40,000] a t, 2017 yf {Gira State Supplies which are who! iy exempt u/s 11 of oF ee eee Nil Nu {6 Value of inward supplies on which tax payable under RCM ( (otto be included) seetio | e 0000 (7 Intra-State supplies of goods Y chargeable @ 18% GST Se en [Aggregate turnover uo us il a Rate of composite tax a = at Total Composite tax basis (amount in 3+ (0) Taxpayable under reverse charge e a ‘Value of inward supplies on which tax payable ‘under RCM A es e Rate of GST 000 25,000, ‘Tax payable under RCM Bl : zs000 pan ‘Total Tax lability [A+B] F i Working Note: (@)_As per Second proviso to Section 10(1) to provide that a composition supplier may supply services of value not exceeding 10% of the turnover in the preceding financial year in a State or Union Territory or 75 lakh whichever is higher. Thus, A Lid. can supply services to the extent of 10% of £120 lakhs ie. € 12 lakhs. ‘According t0 Explanation to Section 10(), for the purposes of second proviso, the value of exemp! SUPPIY of services provided by way of extending deposits, ans ot advances in so far as the consideration is represented by way of interest or discount shall not be taken into account for determining the value of turnover in a State or Union teritory. Since the value of services provided excluding interest earned on deposits is & 6,00,000 which is within the limit of 2akhs, hence A Lid. is eligible for composition scheme, (2) According to Explanation 2to Section 10 for the purposes of determining the tax payable by a person under this ee fares Bae ox uote in Union teeny! shall ot ineude the value of exempt services provi way of extending deposits, loans or advances in so far as th jideration i represented by way of interest or discount. ‘ates ee mposit »pted for Solution: The cost to the ultimate consumer under two schemes is as under Particulars ‘Composition Cost of goods sold (*No credit i i cos (No erat under composition scheme, lence, cost of goods sold will be Saeme Add: Costs of maintaining records $2,50,000 Add: Normal Expenses 50,000 Total Costs Sales (inclusive of all taxes) cf oa Less: Tax (GST = € 60 lakh * 5 + 105); (Cor 00; ); (Composite Tax = x Sales (net of taxes) Baul) Profit of the dealer (Sales, net of taxes ~ Total Costs) | 578286 3540 000 : [aezeey Conelusion :Itis apparent that while cost to ultimate consumes 2.94286| 3,40,000 is higher if iti ae igher ifthe dealer opts for composition scheme, Hence, Scie fees opted, POR ofthe dealer opted.GST: COMPOSITION LEVY CA. Yogendra Bangar & CA. Vandana Bangar 4.9 eee ‘COMPOSITION SCHEME FOR SERVICES eee relating to composition scheme for suppliers of service who are not eligible to opt for ‘Ans: Composi ‘scheme under Section 10(1) and 10(2) of the CGST Act, 2017. ion scheme for services [Section 10(2A)] : The relevant provisions are discussed as under— (1) Composition scheme for services suppliers ~ Optional scheme : Section 10(2A) has provided an option to a registered person whose aggregate turnover in the preceding financial year is upto % 50 lakh and who is not eligible to pay tax under section 10(1), to pay tax © 6% (3% CGST and 3% SGST/ UTGST).. Thus, traders and manufacturers of goods and restaurant service providers who are eligible for composition scheme u/s 10(1) (even if not opted) will not enter this facility Conditions : A registered person can claim the benefit of this scheme provided he complies with the following @) (4) conditions (a) His aggregate turnover in the preceding financial year must not exceed € 50 lakh. Thus, the registered persons intending to opt for this scheme in the Financial Year 2022-2 should not have aggregate turnover of ‘more than % 50 lakhs during the Financial Year 2021-22; Computation of aggregate turnover for the purpose of eligibility [Explanation 1] : For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this scheme, the expression "aggregate turnover" — > hall include the value of supplies made by such person from the 1" day of April of a financial year upto the date when he becomes liable for registration under this Act, > but shall not include the value of exempt supply of services provided by way of extending deposits, Joans or advances in s0 far as the consideration is represented by way of interest or discount. (b) He isnot engaged in making any supply of goods or services which are not leviable to tax under this Act; (©) Hes not engaged in making any inter-State outward supply -neither of goods nor of services. (@)_He is not engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52; (©) He is not a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council, In composition scheme under section 10(1), condition is that the supplier should not be engaged in manufacture of notified goods. (® Heisnot a casual taxable person or a non-resident taxable person. ‘The supplier of following goods will not be eligible to opt for this scheme S| Tariffitem, subheading, Description | No. | __heading oz Chapter L 00 Jee cream and other edible ice, whether or not containing cocoa. a 4 Pan masala 2A. 22021010 Aerated Water ial: 24 ~ [All goods, fe, Tobacco and manufactured tobacco substitutes “Applicable for all transactions of registered person with same PAN : Where more than one registered person 50 having the same Permanent Account Number issued under the Income-(ax ‘Act, 1961, the registered person shall not be eligible to opt for this scheme unless all such registered persons opt to pay tax under this scheme, Rates of tax : The rate of tax under this scheme levy is as under— BligiblePerson [____ Rate of Tax cannot exceed (96 of tumover) “Total rate of tax cannot " CGsT SGST exceed Service supplier and|3% of the turnover ‘of |3% of the turnover of |6% of the turnover of mixed supplier supplies of goods and|supplies of goods and supplies of goods and Services in the State or|services in the State or services in the State oF Union territory. Union territory. Union territory.GST; COMPOSITION LEVy ©.CA: Yogensra Bangar & CA. Vandens Banga: pe Supplies to be excluded for determining t 2}: For the purposes of determining the denover in Union territory" shall not include the value (supplies from the 1" day of April of a financial yet registration under this Acly and i : (i) exempt supply of services provided by way of extending deposits, 1o Consideration is represented by way of interest or discount, _ . tumover exceeds © 50 lakh [Section 10(3)] : The be over of € 50 lakh in current financial year. Thy apse with effect from the day on which his aggregate ing payment of tax [Explanation UT fo sim sumnover in State/ UT for determi Se cats tax payable by a person under this sections ‘of following, supplies, namely:— ar upto the date when such person becomes liable for ans or advances in so far as the efit of composition scheme can be 1e option availed of by a registered turnover during a (6) Option lapses if aggregate availed up to the aggregate turt person under Section 102A) shall |. financial year exceeds the limit of €50 lakh ‘on tax not to be Collected from Recipients [Section 10(4)] : A tax any tax from the recipient on supplies made ~able person to whom the provisions of (6) Compositis by him, It means that a composition scheme applies shall not collect composition scheme supplier cannot issue a tax invoice (Input tax credit cannot be Availed [Section 10(4)] : A taxable perso scheme applies shall not be entitled to any credit of input tax. {@) Penal Consequences [Section 10(6)]: Ifthe proper officer has reasons to believe that a taxable person has paid tax under composition scheme despite not being eligible, such person shall, in addition to any tax that may be payable by him under any other provisions ofthis Act, be liable to a penalty and the provisions of Section 73 or Section 74 shall be applicable for determination of tax and penalty. (©) Composition scheme not applicable for tax payable under Reverse Charge Mechanism (RCM) : It is important to note that for any tax payable under reverse charge mechanism, the option of payment under this scheme will sa be available. Rate of tax payable on supplies taxable under RCM will be regular rates and not the composition wn to whom the provisions of composition (10) reas not entitled to take credit of Composition tax: Customer who buys goods from registered person whe ler composition scheme is not eligible for composition input tax credit i tic ecard P jput tax credit because a composition scheme According to Explanation 2, for the pui expression "turnover in State or turnover in Union territory" (@) supplies from the first : d day of April of a financi Fe gisalng aad Ace a et le date whan su nee ea em (i) exempt supply of servi i *, ‘i Ren Supp of services provided by way of extending deposit Se a nee ane yee loans or advances in so far as the considerati : ier. Thus, Care & Care Beaut ik j ty Contre is eligi ax payable by itisasunders Be! PAY '@x under this notification upto the turnover of % 50 r Of lakh. The total(OMPOSITION LEVY 4.11 2Ct CI Orch. Van _ 7 — i Tax Rate —Fumnover | Tax liability | TERT @ ® TP Quarter jumover did not exceed © 20 lakh, it was not required to| 20 lakh Nil Oe n. Hence, no tax was required to be paid 2° Quarter htective rate ix 6% (CGST + SGST/UTGSI) as per section 10(2A) | 30a 1,80,000 “ cof the Act. (60-20) lakh} or the month of | Normal rate of GST of 18% isto be applied 201akh 3,60,000 October, 2022 _ {(70-50) lakh) _ Total tax payable 5,40,000 e under Section 10(1) from the next financial year. ‘nnot opt for composition scheme heme ean be availed in respect of goods and only one se « are concerned, only marginal supply of the such services for ‘vice, as the case may be, is permitted under Jy in supply of services other than restaurant No, Care & Care Beauty Centre ca Fundamentally, the composition sl envice As regards services other than restaurant services aervecified value along with the supply of goods and/or restaurant Se 2 tron 10(l) of CGST Act, 2017, Therefore, a person engaged exclusive gible to opt for composition scheme, srvice namely, restaurant services is not eli stered ropair centre where electronic goods he is not engaged in making any inter-State mn under Section 10(2A) of the CGST compute the amount of tax payable by him financial year is ¢ 35 lakh. few items required for providing repair services from neighbouring te turnover in the current Solution: Section 10(1) anc 10(2) of the CGST Act, 2017 provides that a registered person, whose aggregate turnover in the preceding financial year did not exceed € 1.5 crore (& 75 lakh in Special Category States except Assam, Himachal Pravesh and Jammu and Kashmiz), may opt to pay, in lieu of the tax payable by himy an amount calculated at the specified rates, However, if infer alia, such registered person is engags services, he shall not be eligible to opt for composition levy under Section scheme under Section 10(2A) of the CGST Act, 2017. Section 10(2A) has provided an option to a registered person whose aggregate tamover 1 the preceding financial year is upto %50 lakh and who is not eligible to pay tax under composition scheme, to pay Its @ 3% (Effective rate 6% (CGST+ SGST/UTGST)] on first supplies of goods and/or services upto an aggregate turnover of 50 lakh made ‘on/after Ist April in any FY, subject to specified conditions. “Thus in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the benefit of concessiona! payment of tax ander Section 10(2A) as his aggregate tumover in the preceding FY does nat exceed % 50 lakh and he js not eligible to cpt for the composition scheme. “Thus, the amount of tax payable by him under Section 10(2A) is & 210,000 [6% of @ 35 lakh). A registered person cannot opt for Section 102A), if intr alia, he is engaged in making any inter-State outward supplies, However, there is no restriction on inter-State procurement of goods. Hence, answer ‘will remain the same even if Mr, Ajay procures few items from neighbouring State of Madhya Pradesh, din the supply of services other than restaurant 40(1) and 10(2) but he can avail composition Ans: Intimati i —— ion for composition levy [Rule 3 and Rule 4] (1) Option to pay composite tax along with application for registration ~ Deemed intimation for Composition Scheme [Rule 3(2)] : Any person who applies for registration may give an option to pay tax under composition scheme in Pat B of registration form viz, FORM GST REG-O1, which shall be considered as an intimation to Pay tax under the said Section.ee Gsi-es cA. Yogends BANEAr : ay ail mation shall be considered only ‘Effective date after the grant gf Rules, 2017, such int a ery al i from the date from which repistra y tax under com Q) Filing of intimat tax under Section ‘commencement o! & CA. Veit ‘of Composition Levy ic jlican! OF regiatation to the apPHCAN 2 Se eters Rule 3(3)] : ANY TeBt scribed form on the ea stered person who opts 19 pay “mon portal PHOF to the the aforesaid Section 16 y tax under x under composition 110 shall electronica! 2017, the option to pay “jal year St Rule 4 of GST Rules, ive date of Composition A ae Eee Sak fective rom the begeoning oe ne TA al oa spematemen in pes for (FM ST ecaration within 60 days: He sh" OTS og 69 days from the commencement of the umishing of TC Rule 44(4) within a ps YTC-03] in accordance wit Se all places in case of pa ie for Ae 0) Grimms ey a pusiness registered on the same Permanent ‘Account Number. for composition levy. position levy [Rule 5] = 4 for Composition Levy [Rule 5(1)] + fh the following conditions, namely:- ident taxable person; d from an unregistered supplier and where ith the provisions of Tape — le 3(6)] : Any intimation in respect of any place i Ee ete in respect of all other places of ee ee The person exercising the option to pay “Ans: Conditions and restrictions for com) (0) Conditions which are to be satisfies tax under Section 10(1) shall comply wit! (@)_heis neither a casual taxable person nor a non-res (b) the goods held in stock by him have not been purchase: purchased, he pays the tax under Section 9(4) (he shall pay tax under Section 9(3Y/) (reverse charge) on inward supply of goods or services or both; (@ he was not engaged in the manufacture of goods as notified under Section 10(2)(e) i.e. ice creamy ‘pan-masala, aerated water, tobacco, Fly ash bricks or fly ash aggregate ‘with 90% or more fly ash content; Fi ash blocks, Bricks of fossil meals or similar siliceous earths, Building bricks and Earthen or roofing files during the preceding financial year; a va (©) he shall mention the words “composition taxable person, not eligibl ies” Eee ee ee person, not eligible to collect tax on supplies” at the top ae stall ae is “composition table person” on every notice or signboard displayed at a oe Lae at rrincipal place of business and at every additic in Be ee ition cvecy year [hale The rg je piace ox places oftbusinessy ry year [Rule 5(2)] : The registered person paying t r not file a fresh intimation every year and he may continue to ease iie ect ues Fer secre atardl ices lee pay tax under the said Section subject to the ‘Sepa te revisions regarding validity of composition sche1 cael i) Ans: Validity of composition levy [Rule 6] ms a ae valid ~ Till satisfaction of Conditions ler Section 10 shall remain valid so lon, under these rules. es [Rule 6(1)] : The o is perso! )]: The option exercised by a registered s he satisfies all the conditions mentioned in the said ee He shall htt 88 nvoie for every texabl ; al ftom the scheme in FORM GS’ 3) Application for Withdrawal . composition scheme shal, b signed or verified through from Scheme fie 6()] : The registered ich ef = ore the date of such withdrawal: A oe eee the intends to withdraw from the EV who i C electronically on the common L ‘pplication in FORM GST. awialy «: |ON LEVY Son png Vandana Bat 4.13 {© Reply to SCN [Rule 665]: The registered person shal reply to the shows cause notice issued under Rule 6(4) in FORM GST CMP-06. Final order within 30 days of Receipt of Reply : The proper officer shall issue an order in FORM GST CMP-07 ‘within a period of 30 days of the receipt of such reply, either accepting the reply, or denying the option to pay tax wider Section 10 from the date of the option or from the date of the event concerning such contravention, a5 the case may be. (6 Details of stock to be furnished on opting out of such Scheme [Rule 6(6)] : Every person who has furnished an intimation under Rule 6(2) or filed an application for withdrawal under Rule 6(3) or a person in respect of whom fan order of withdrawal of option has been passed in FORM GST CMP-07 under Rule 6(6), 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 30 days from the 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. He shall be entitled to avail 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. @ Withdrawal applies to all units [Rule 6(7)] : Any intimation or application for withdrawal under Rule 6(2) or (3) or denial of the option to pay tax under Section 10 in accordance with Rule 6(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. (@) Penalty provisions in case of irregular availment of the composition scheme : If a taxable person has paid tax under the composition scheme though he was not eligible for the scheme, the person would be liable to penalty and the provisions of Section 73 or 74 of the CGST Act shall be applicable for determination of tax and penalty. Girailar No. | Effective date in case of denial of composition option by tax authorities : In case of denial of 77/52018-GST | option to pay tax under composition levy by the tax authorities, it has been clarified that the dated 31-12-2018 | effective date of such denial shall be from a date, including any retrospective date, as may be determined by tax authorities. However, such effective date shall not be prior to the date of contravention of the provisions of the CGST Act/ CGST Rules. ‘SUUERSIRIENE mariner of Submission of return by the composition presumptive scheme supplier. 1) Ans: Form and manner of submission of statement and return [Rule 62 of CGST Rules, 2017] (@) Composition/Presumptive scheme taxpayers to file return annually and make payment quarterly : Every registered person paying tax under section 10 shall electronically furnish - (@) a statement in the prescribed form (GST CMP-08) containing details of payment of self-assessed tax, for every quarter (or part of the quarter), by 18" day of the month succeeding such quarter, and (b) a return (GSTR 4) for every financial year (or part of the financial year), on or before 30" day of April following the end of such financial year. 2) Payment of tax, interest, etc. by electronic cash ledger [Rule 62(2)] : Every registered person furnishing the statement under Rule 62(1) shall discharge his liability towards tax or interest payable by debiting the electronic cash ledger. (3) Contents of information [Rule 62(3)] : The return furnished shall include the— (invoice wise inter-State and intra-State inward supplies received from registered and un-registered persons; and (b) consolidated details of outward supplies made. @ Obligation to furnish additional returns by compositior/presumptive scheme supplier who opts under the ‘scheme from beginning of Financial Year [Rule 62(4)] : A registered person who has opted to pay tax u/s 10 from the beginning of a financial year shall, where required, furnish the details of outward and inward supplies and Tetum under rule 59, 60 and 61 relating to the period during which the person was liable to furnish such details and returns till the due date of furnishing the return for the month of September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier ITC not available [Explanation] : Here, the person shall not be eligible to avail ITC on receipt of invoices or debit notes from the supplier for the period prior to his opting for the composition scheme,414 GST: COMPOSITION LEVy = CA. Yopendea Bangar &CA. Vandana Bangay {© Furnishing of details on opting out of composition scheme [Rule €2(6): A registered person opting t0 withdraw from the composition scheme at his own motion or where option is Sawn atthe instance of the proper officer orn in the prescribed form for the period for which he has paid tax under ‘hich the date of withdrawal falls ang shall, where required, furnish a stat day of the month succeeding the quarter in w/ dof the financial year during which the composition scheme till 18 id period till the 30" day of April following the en furnish GSTR 4 for the sai such withdrawal falls.