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Latest Amendments in the Composition Scheme levy under Goods and Service Tax

Latest Amendments in the Composition Scheme levy under Goods and Service Tax

In order to avail the composition scheme the annual turnover limit for the preceding financial year has been increased from 1 crore to 1.5 crore. Earlier GST turnover threshold for obtaining the composition scheme was 1 crore which is now raised to 1.5 crore and in some states it is 75 lakhs. So if one is opting for this scheme, then there is no tax liability below the exempted limit and also the compliance has reduced from filing of quarterly return to filing of only one annual return thereby providing a relief to MSME’s by reducing the compliance.

Further, the council also decided to provide benefit is this composition scheme to service providers. The threshold limit of turnover for preceding financial year has been set to 50 lakhs for suppliers of services or  mixed suppliers and the Tax rate for the same would be 6% (i.e., 3% CGST + 3% SGST). The liability to paying of taxes is on quarterly basis and that of filing shall be one Annual Return with a prescribed declaration.

In accordance to section 10 – Amendments in composition scheme,  Non-resident taxable person and Casual taxable persons shall not be eligible for opting composition scheme under section 10(1).  A new composition scheme was introduced in section 10 (2A)  for registered persons whose aggregate turnover in preceding financial year did not exceed Rs 50 lakh but who are not qualifying for composition scheme under section 10 (1). Such persons will be required to pay tax at such rate as may be prescribed but not exceeding 6% (effective tax rate)ofthe turnover in the State or turnover in the Union territory in accordance with the prescribed scheme. The scheme can be adopted only if all the registration qualify the conditions of the scheme for persons having multiple registrations. Liability to pay tax under reverse charge mechanism in accordance with section 9(3) And 9(4) of the act shall be applicable to such persons. It is to be noted  that this scheme is already in operation w.e.f 01/04/2019 Notification No.2/2019 dated 07/03/2019.

 

The last date to intimate for availing the alternate composition scheme is extended from 30/04/2019 to 31/07/2019.

 

To clarify the computation of aggregate turnover of a person following explanations can be referred,

 

  • The expression aggregate turnover shall include the value of supplies made by such persons from 1st day of April of a financial year upto the date when he becomes liable for registration under this Act, for the purpose of computing the aggregate turnover of a person for determining his eligibility for the composition scheme in accordance to section 10. Further, however, for the purpose of deciding tax payable by such persons, value of such supplies shall be ignored.
  • For the purpose of deciding eligibility as well as liability to pay tax for the purpose of composition schemes under section 10, consideration in the form of Interest or discounts for providing exempt supply of services of extending deposits, loans and advances shall be excluded from value of turnover in a State or Union territory.


Download Notification No. 2/2019-Central Tax (Rate)

 

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