Composition Scheme under GST in India

 

 

Composition Scheme under GST in India

 

 

 

Composition Scheme under GST in IndiaWill a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?

composition scheme would become applicable for all the business verticals/registrations which are separately held by the person with same PAN

Can composition scheme be availed if the taxable person effects inter-State supplies?

No, composition scheme is applicable subject to the condition that the taxable person does not affect interstate supplies.

Can the taxable person under composition scheme claim input tax credit?

No, taxable person under composition scheme is not eligible to claim input tax credit.

Can the customer who buys from a taxable person who is under the composition scheme claim composition tax as input tax credit?

No, customer who buys goods from taxable person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice

Can composition tax be collected from customers?

No, the taxable person under composition scheme is restricted from collecting tax. It means that a composition scheme supplier cannot issue a tax invoice.

What is the threshold for opting to pay tax under the composition scheme?

The threshold for composition scheme is Rs. 50 Lakhs of aggregate turnover in financial year.

How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?

The methodology to compute aggregate turnover is given in Section 2(6). Accordingly, ‘aggregate turnover’ means ‘Value of all supplies (taxable and non-taxable supplies + Exempt supplies + Exports) and it excludesTaxes levied under CGST Act, SGST Act and IGST Act, Value of inward supplies + Value of supplies taxable under reverse charge of a person having the same PAN.

What are the penal consequences if a taxable person violates the condition and is not eligible for payment of tax under the Composition scheme?

Taxable person who was not eligible for the composition scheme would be liable to pay tax, interest and in addition he shall also be liable to a penalty equivalent to the amount of tax payable. (Section 8 (3) of the MGL).

What is the minimum rate of tax prescribed for composition scheme?

1% minimum rate of tax is prescribed for composition scheme.

 

 

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