ISSUES IN COMPOSITION SCHEME UNDER GST PGS & ASSOCIATES

ISSUES IN COMPOSITION SCHEME UNDER GST PGS & ASSOCIATES

DEFINITIONS:- Aggregate Turnover means the aggregate value of all taxable supplies, 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 excludes Central Tax, State Tax, Union Territory Tax, Integrated Tax and Cess, the value of inward supplies on which tax is payable by a person on reverse charge basis. It has been clarified that in determining the aggregate turnover, to determine eligibility for composition scheme, value of supply of any exempt services including 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 in to account. [Order No. 1/2017 of Removal of Difficulties Order Central Tax Dated 13-10-2017] 21-04-2018 PGS & ASSOCIATES 2

DEFINITIONS:- Input Tax Credit means the credit of Tax paid on Inputs & Input Services Reverse Charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act. 21-04-2018 PGS & ASSOCIATES 3

APPLICABILITY :- Businesses with annual turnover upto Rs. 1 Crore [1] w.e.f. 13-10- 2017 can opt for composition scheme. Threshold limit for special category of States were also enhanced to Rs. 75 lakhs. Turnover of all businesses with same PAN has to be added up to calculate turnover for the purpose of composition scheme. 21-04-2018 PGS & ASSOCIATES 4

ELIGIBILITY FOR COMPOSITION LEVY:- i. He is not engaged in supply of services other than restaurant services; ii. He is not engaged in supply of goods which are not leviable to tax; iii. He is not engaged in making any inter-state outward supplies of goods; iv. He is not engaged in supply of goods through electronic commerce operator who is required to collect tax at source; and v. He is not a manufacturer of such goods as may be notified by Government. vi. He is neither a casual taxable person nor a non-resident taxable person; 21-04-2018 PGS & ASSOCIATES 5

vii. The goods held in stock by him on the appointed day have not been purchased in the course of inter-state trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3; viii. The goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9; ix. He shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both; x. He shall mention the words composition taxable person, not eligible to collect tax on supplies at the top of the bill of supply issued by him; 21-04-2018 PGS & ASSOCIATES 6

GST RATES Sr. No. Category of Registered person Rate of Tax (CGST + SGST) prior to 01/01/2018 Rate of Tax from 01/01/2018[2] 1 Manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobbacco prodcuts etc.) 2% of the TO in State or UT 1% of the TO in State or UT 2 Restaurant Services (not serving alcohol) 5% of the TO in State or UT 5% of the TO in State or UT 3 Traders or any other supplier eligible for composition levy (On Turnover of taxable supplies ) 1% of the TO in State or UT 1% of the TO in State or UT 21-04-2018 PGS & ASSOCIATES 7

MIGRATION TO COMPOSITION LEVY 1. Tax payers registered under earlier law: Such tax payers who had been migrated to GST have to opt for composition by electronically filing intimation in Form GST CMP-01 prior to the appointed date i.e. 01-07-2017 or within 30 days after the said date i.e. 31-07-2017. This time period has been extended till 16-08-2017[3]. Such persons have to furnish details of stock including the inward supply of goods received from un-registered persons, held by him on the daypreceding the date from which he opts to pay tax under the said section, electronically, in FORM GST CMP-03 within a period of 90 [4]days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf. Board had extended the time period for filing CMP-03 to 31-10-2017[5] and further extended till 30-11-2017[6]. Board had further extended time period till 31st January 2018[7] for filing stock details on the date preceding the date from which the option to pay tax under Composition Levy (Section 10 of the Act) is to be exercised in FORM GST CMP-03. [3] Order No. 1/2017 Dated 21-07-2017 [4] Substituted for 60 days w.e.f. 17-08-2017 vide N. No. 22/2017 CT Dated 17-08-2017 [5] Order No, 4/2017 GST Dated 29-09-2017 [6] Order No. 5/2017 GST Dated 28-10-2017 [7] Order No. 11/2017 GST Dated 21-12-2017 21-04-2018 PGS & ASSOCIATES 8

2. Tax payers registered under turnover criteria or voluntary registration: Tax payers who opt to discharge tax liability under composition scheme have to opt, by filing Part B of Form GST REG-01. If tax payers do not opt at the time of registration, such persons have to discharge tax liability under normal scheme and have option only in next financial year. If tax payers opt for composition scheme, have to intimate by filing Form GSTR CMP-02 prior to the commencement of financial year. Moreover, he has to also furnish statement in Form GST ITC-03 (Stock Statement) within a period of 60 days from the commencement of relevant financial year. 3. Tax payers migrating from normal scheme to Composition Scheme: Tax payers who have missed the deadline of 16-08-2017 means not able to intimate about opting for composition scheme, it has been provided from 13-10-2017 [8] that such tax payers can opt for the scheme from the first day of the month immediately succeeding the month in which he files and intimation in Form GST CMP-02 on the portal on or before 31-03-2018. Such tax payers have to furnish statement in Form GST ITC-03 (Stock Statement) within a period of 90 days from the day on which such person commences to pay tax under section 10. Such persons are not allowed to furnish the declaration in Form GST TRAN-1 after the statement in Form GST ITC 03 have been furnished. 21-04-2018 PGS & ASSOCIATES 9

WITHDRAWAL FROM COMPOSITION LEVY The registered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. Every person who has filed an application for withdrawal from the composition scheme, may electronically furnish, 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 of withdrawal, within a period of thirty days of withdrawal. Any intimation or application for withdrawal 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. 21-04-2018 PGS & ASSOCIATES 10

GST PAYABLE UNDER REVERSE CHARGE The exemption for payment of RCM under section 9(4) does not apply to composition dealers. Tax will have to be paid on such supplies by the composition taxpayer under reverse charge mechanism The composition dealers are required to pay tax under RCM at the same rate (Normal Rate) applicable to goods or services on supply received from Un-registered persons Import of services The tax paid under RCM is not eligible for ITC IGST should not be paid by a composition dealer. The dealer is required to pay tax under reverse charge, import of service or purchase from an unregistered dealer has to pay only CGST and SGST. 21-04-2018 PGS & ASSOCIATES 11

GST PAYMENT, BILLING, PAYMENT & RETURN UNDER COMPOSITION LEVY GST COLLECTION :- Registered person can not collect GST from the Customer. TAX INVOICE :- They cannot issue a tax invoice. A Composition Dealer has to issue Bill of Supply. TAX PAYMENT :- The tax can be paid on or before 18th day of the month succeeding the quarter in which such supplies were received. GST RETURN :- The information relating to such supplies should be shown by the composition taxpayer in Table 4 of return in FORM GSTR -4. Recently, vide a press release it has been clarified that details of purchases need not be filed in the above form. 21-04-2018 PGS & ASSOCIATES 12

THANK YOU Email : Premal@pgsca.in Mobile No: 9324383636. 21-04-2018 PGS & ASSOCIATES 13