Tuesday, August 1, 2017

gst composition scheme



what is composition scheme under GST?
composition scheme under GST


  • Only taxable persons whose aggregate turnover less than 75 lakhs in the finance year are eligible to get GST Composition scheme. (some sates limit is 50 lakhs)
  • Supplier cannot obtain scheme if the supply goods and in the corse of interstate supply.
  • Taxable person obtained composition scheme shall not be to input tax credit cannot collect tax on supply.
Composition scheme aggregate turnover calculation
GST Composition Scheme Aggregate Turnover Calculaton


Q) Will tax be payable on reverse charge?

A) Opting for composition scheme will not charge tax liability in case of reverse charges.

Q)  what's composition scheme under GST?
A). This GST Scheme is helpful for small taxpayers in India for levy of tax whose turnover is as much as INR. 75 Lakhs ( INR.50 Lakhs for few States). The goal of composition scheme is to deliver simplicity and to reduce the compliance fee for the small taxpayers.

Q)  who are the persons no longer eligible for composition scheme?
Ans. Following individuals are not allowed to choose the composition scheme:


  • 1) a casual taxable character or a non-resident taxable person; 
  • 2) suppliers whose mixture turnover inside the previous economic year crossed Rs. 75 lakhs; 
  • 3) provider who has bought any goods or services from unregistered provider except he has paid GST on such items or services on reserve charges basis; 
  • 4) supplier of services, aside from eating place provider; 
  • 5) persons supplying goods which are not taxable under GST law;
  • 6) persons making any inter-state outward substances of goods; 
  • 7) suppliers making any supply of goods through a digital trade operator (Like amazon, ebay etc.,)who's required to acquire tax at source under section 52; 

Please Noted the following point:
No rule on shopping items from inter-state suppliers by aid persons opting for the composition scheme.

Q) who will someone opting for composition levy pay tax?
A) before 18th of the month succeeding the quarter on the quarterly basis.

Q) Can a registered person, who purchases items from a taxable individual paying tax underneath the composition scheme, avail credit of tax paid on purchases made from the composition dealer?
A) No,  composition supplier can't acquire tax paid by means of him on outward supplies from his clients, the registered character making purchases from a taxable character paying tax beneath the composition scheme can't avail credit.

Q) what is the eligibility class for choosing composition levy? 
A)  annum turnover not more than 75 lakhs then you are eligible under GST composition scheme. but the following states annum turnover, not more than 50 lakhs.

1) Arunachal Pradesh
2) Assam
3) Manipur
4) Meghalaya
5) Mizoram
6) Nagaland
7) Sikkim
8) Tripura
9) Himachal Pradesh

Q) a person availing composition scheme during a monetary 12 months crosses the turnover of Rs.75 lakhs/50 lakhs for the duration of the course of the yr i.e. say he crosses the turnover of Rs.seventy five lakhs/50 lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?
A) No. the choice to pay tax beneath this scheme lapses from the day on which his mixture turnover at some stage in the monetary yr exceeds the required restrict  (INR. 75 lakhs / INR. 50 lakhs).

he is required to document an intimation for withdrawal from the scheme in shape GST CMP-04 inside seven days from the day on which the threshold restrict has been crossed. however, such character will be allowed to avail the input tax credit in admire of the stock of inputs and inputs contained in semi-completed or finished items held in stock through him and on capital items held via him on the date of withdrawal and supply a announcement inside 30 days of withdrawal containing the information of such inventory held in shape "goods and service tax  input credit -01 form" on the common portal.

Q) What is the specified rate of composition levy?


rate of composition levy



Q) What are the penal results if someone opts for the composition scheme in violation of the conditions?
A) If a taxable man or woman has paid tax underneath the composition scheme though he turned into now not eligible for the scheme then the man or woman could be liable to penalty and the provisions of section 73 or 74 shall be applicable for dedication of tax and penalty.

Q) How will the aggregate turnover be computed for the purpose of composition?
A) mixture turnover may be computed on the premise of turnover on an all India basis and will encompass price of all taxable element supplies, 
exempt supplies and exports made with the aid of all men and women with equal PAN, however, would exclude inward supplies under reverse charges in addition to Central, State/Union Territory and Integrated taxes and cess.

Q) Can someone who has opted to pay tax beneath the composition scheme avail input Tax credit score on his inward supplies?
A) No. He can not take credit score on his input supplies. when he transfer over from composition scheme to regular scheme, eligible credit score on the date of transition would be allowed (refer Q above).

Q) Can someone who has already received registration, choose price under composition levy? in that case, how?
A) sure. Such persons need to provide intimation electronically in shape GST CMP-02 however from the beginning of the financial year simplest.

Q) What type of form used for Composition Levy Quarterly return?
A) GSTR-4 (Goods and Services Tax Return Form  No - 4) 

Q) Can a person paying tax underneath composition scheme make materials of products to SEZ?
A) No. supplies to SEZ from domestic tariff region might be handled as inter-State supply. someone paying tax under composition scheme can not make inter-state outward supply of goods. accordingly, for making resources to an SEZ unit, a person needs to take registration as an everyday taxpayer. The components to SEZ could be zero rated and the supplier may be entitled to
 make materials with out fee of tax or if he pays tax, he will be entitled to refund of tax so paid.

Q) Are month-to-month returns required to be filed by way of the person opting to pay tax beneath the composition scheme?
A)No. Such men and women want to electronically document quarterly returns in shape GSTR-4 (Goods and Services Tax Return Form  No - 4) on the GSTN not unusual portal by the 18th of the month succeeding the region. for example return in recognize of supplies made through out July, 2017 to September, 2017 is required to be filed by 18th October, 2017.

Q) What are the simple statistics that need to be furnished in GSTR-4 (Goods and Services Tax Return Form  No - 4)?
A) it would incorporate information of the turnover in Union territory or turnover in with in state,  inward supplies of goods or services or both and tax payable.

Q) Will withdrawal intimation in any individual location be relevant to all locations of enterprise?
A) sure. Any intimation or utility for withdrawal in recognize of any place of business in any state or Union territory, shall be deemed to be an intimation in appreciate of all different places of enterprise registered at the identical everlasting Account wide variety.

Q) What is the shape in which an intimation for payment of tax underneath composition scheme needs to be made with the aid of the taxable individual?
A) The intimation is to be filed electronically in shape Goods and Service Tax CMP- 01 or form Goods and Service  CMP- 02.

Q) Can someone making software for sparkling registration under GST opt for composition levy at the time of creating an application for registration?
A) yes. Such men and women can give the choice to pay tax underneath the composition scheme in component B of shape GST REG-01. this may be taken into consideration as an intimation to pay tax underneath the composition scheme.

Q)  Can the choice pay tax under composition levy be exercised at any time of the yr?
A) No. the choice is needed to receive electronically in form GST CMP-02, prior to the commencement of the applicable monetary year.

Q) What are the compliances from ITC reversal point of view that need to be made by way of a person choosing composition levy?
A) The registered individual opting to pay tax under composition scheme is needed to pay a quantity equal to the input tax credit score in recognize of inputs held in stock and inputs contained in semi-finished or completed items held in stock at the day immediately previous the date of exercise of the option. 
"Input tax credit" on inputs will be calculated proportionately on the basis of corresponding invoices on which credit score had been availed by way of the registered taxable character on such inputs.

In recognition of capital goods held in stock on the day without delay preceding the date of exercising of choice, the input tax credit worried in the remaining beneficial existence in months shall be computed on seasoned-rata foundation, taking the useful existence as five years. assume capital items had been in use for 4 years, 6 months and 15 days. The useful last lifestyles in months could be 5 months ignoring the part of the month. If ITC on such capital items is taken as C, ITC due to the ultimate beneficial existence could be C expanded by using 5/60. this would be the amount payable on capital items.

The ITC amount shall be determined one at a time for integrated tax, central tax and state tax/Union territory tax. The fee can be made through debiting electronic credit ledger, if there is enough stability within the stated ledger, or by way of debiting digital coins ledger.The balance, if any within the electronic credit ledger could lapse.

Such Persons also need to grant the statement in shape GST ITC-03 which is a assertion for intimation of ITC reversal/price of tax on inputs held in stock, inputs contained in semi-finished and completed items held in stock and capital goods under section 18(four) of the CGST Act, 2017 inside a period of sixty days from the graduation of the relevant financial 12 months.

Q)  In case a person has registration in a couple of states? Can he opt for payment of tax under composition levy best in one state and not in other state?
A) the option to pay tax underneath composition scheme will have to be exercised for all States.

Q)  What are the opposite situations and restrictions concern to which a person is authorized to avail of composition scheme?
A) The individual workout the choice to pay tax under section 10 shall comply with the following other situations.

1) he shall mention the words “composition taxable person, not eligible to accumulate tax on  supplies” on the top of the invoice of deliver issued by way of him; and
2) he shall point out the words “composition taxable man or woman” on every note or signboard displayed at a distinguished region at his predominant administrative center and at every extra place or locations of enterprise.

Q) Can someone paying tax under composition levy, withdraw voluntarily from the scheme? if so, how ? 
A) sure. The registered individual who intends to withdraw from the composition scheme can record a duly signed or validated software in form GST CMP-04.

every body who has filed an utility for withdrawal from the composition scheme, may additionally electronically supply, a assertion in form GST ITC-01 containing details of the inventory of inputs and inputs contained in semi-finished or completed items held in inventory with the aid of him on the date of withdrawal, within a length of thirty days of withdrawal.

Q)  What motion may be taken by means of the right officer for contravention of any provisions of composition levy and the way?
A) in which any contravention is discovered by using the proper officer in which the registered individual turned into now not eligible to pay tax under the composition scheme or has contravened the provisions of the CGST Act, 2017 or provisions of chapter II of the CGST policies, 2017, he may additionally issue a notice to such person in form GST CMP-05 to expose motive within fifteen days of the receipt of such note as to why the option to pay tax under the composition scheme shall no longer be denied.

Upon receipt of the respond to the stated show reason notice in shape GST CMP-06, the proper officer shall problem an order in form GST CMP-07 inside a duration of thirty days of the receipt of such reply, both 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 regarding such contravention, because the case may be.

Q) In case the option to pay tax under composition levy is denied through the right officer, can the person avail ITC on stock after denial?
A) sure. ITC can be availed via submitting, a assertion in shape GST ITC-01 (containing info of the inventory of inputs and inputs contained in semi-finished or completed goods held in inventory) with the aid of him at the date on which the choice is denied as in line with order in shape GST CMP-07, within a period of thirty days from the order.

Q)  Can supplier of Services opt for composition levy?
A) No, the only exception being supplier of restaurant services

Q)  A registered character has extra ITC of Rs 10, 000/- in his ultimate VAT go back for the duration straight away preceding the appointed day. under GST he opts for composition scheme. Can he carry ahead the aforesaid extra ITC to GST?
A) The registered character will no longer be able to bring ahead the extra ITC of VAT to GST if he opts for composition scheme.

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