Term Small tax payers under Indian Tax

What is Small tax payers under Indian Tax


This post explains about Small tax payers under Indian Tax.  

Small Tax Payers

Small tax payers means tax payers who opts to pay tax on sales at a fixed rate, generally lower rate of tax but not claiming input tax on inputs.

Small tax payers mean tax payers who opts for Composition Levy Scheme for payment of taxes.

Composition Levy Scheme

    • Pay an amount in lieu of tax; minimum rate to be:
      • 2.5% of the turnover in case of manufacturers;
      • 1%   of the turnover in other cases
    • No tax to be collected; No Input Tax Credit available

Conditions for Composition:

    • Permission of Proper Officer  required
    • Registered persons
    • Aggregate Turnover < Rs. 50 Lakhs (all-India basis for taxable persons having same PAN – who shall also opt for composition) but excludes Sch III & IV
    • Aggregate turnover = Value of all supplies (taxable + non-taxable + exempt + exports) – Value of (RCM supplies + inward supplies) – taxes under GST

No composition option in the following specific cases:

Services supplied:

Any/ all services (includes goods treated as supply of services by Sch II)

Goods supplied:

        I.            Non-taxable goods

      II.            Inter-State outward supplies

    III.            Through e-commerce operators

    IV.            Notified goods manufactured by the supplier

If aggregate turnover (all India basis) of preceding FY exceeds 50 Lakhs (If during the FY, the aggregate turnover exceeds 50 Lakhs, no composition from the following day.)

The information on Small tax payers under Indian Tax is detailed above.   Comment below your thoughts on Small tax payers under Indian Tax.


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