All about the Composition Levy of Scheme under GST

Articles related to all about the Composition Levy of Scheme (Section 10 of CGST Act 2017) whose turnover described below a certain limit.

• Limit under Composition scheme
• What is Aggregate Turnover
• Person not availed composition scheme
• Condition & restriction for levy of composition scheme (under Rule 5 of chapter II of CGST Act 2017)
• Form to be submitted
• Composition Rate of Tax
• Penalty for delay in filing GSTR-4
• Important Notes - Content of Bill of supply

Section 10 of the CGST Act, 2017 provides for composition levy to such person. Such person means whose turnover below a certain limit. Composition Scheme is a simple and easy scheme under GST because of taxable person who opt composition scheme is not required to maintain detailed records and filling of detailed returns.

Limit under Composition Scheme:

As per Section 10(1) of CGST Act, 2017 - A registered person whose aggregate turnover in the previous financial year did not exceed Rs. 1.5 crore (Rs. 75 Lakh for North eastern state included Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh) may opt to pay tax under composition levy.

What is Aggregate Turnover:

As per section 2(6) of CGST Act 2017, 'Aggregate Turnover' means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable on reverse charge basis), exempt supplies, export of goods or services or both and interstate supplies of persons having the same PAN to be computed on all India basis but excludes (CGST, SGST, UTT, IGST, CESS).

If Supply of goods by job worker after completion of job work treated as a supply of goods by the principal as per section 143 of CGST Act 2017 and value of such goods shall not be included in the calculation of Aggregate Turnover of job worker but it will be included Aggregate Turnover of principal.

Persons not entitled to availed Composition Scheme:

As per section 10(2) of the CGST Act, 2017 declare the person not entitled to availed Composition scheme. The person who not entitle to availed composition scheme mention below:

1. A taxable person is engaged in the supply of services. (other than restaurant and outdoor catering services)
2. A taxable person is engaged in making any supply of goods which are not leviable to tax under this act. (exempt supplies)
3. A taxable person is engaged in making any interstate outward supplies of goods. (one state to another state)
4. A taxable person is engaged in making any supply of goods through an electronic commerce operator.
5. A taxable person is a manufacturer of such goods as may be notified by the Government on the recommendation of the council. (Manufacturer of ice cream and other edible ice, whether containing cocoa, Pan Masala, All goods like as Tobacco and tobacco substitutes.)

Condition & Restriction for Composition levy (As per Rule 5 of Chapter II of the CGST Rules, 2017)

The person who opts composition levy is to pay tax under section 10 of (composition levy) CGST Act 2017.

1. The person opting the composition scheme must be neither a causal taxable person nor a non - resident taxable person.
2. The goods held in stock by him on the appointed day have not been
   1. Purchased in the course of interstate trade or commerce.
   2. Imported from a place outside India
   3. received from his branch situated outside the state or
   4. from his agent or principal outside the state.
3. The goods held in stock by him have not been purchased from an unregistered supplier and where purchased he pays the tax under reverse charge mechanism. (i.e. section 9(4) of CGST).
4. Composition Taxable person shall pay tax as per normal tax rates in case of inward supply of goods and services or both received under section 9(3) & 9(4) of CGST Act, 2017. Section 9(3) & 9(4) provides for payment of tax the by recipient of goods or services.
5. The taxable person not engaged in the manufacture of goods like as ice cream and other edible ice, Pan Masala, Tobacco and manufacture of tobacco substitutes as notified 10(2)(e) of the CGST Act 2017 during the preceding financial year.
6.  Composition dealer mandatory display on invoices 'composition taxable person' not eligible to collect tax on supplies at the top of the bill of supply issued by him.
7.  Composition dealer mandatory display of words 'composition taxable person' on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place of business.

Form to be submitted:

Composition Rate of Tax:

Returns:

Penalty for delay filing of GSTR 4:

GSTR 04 filed in Quarterly basis within the given time frame but if its not file than penalty levied on it.

Rs. 100 for CGST and Rs. 100 for SGST per day or
Rs. 5000 each CGST & SGST

Whichever is lower.

GSTR 4 cannot be revised after filing on GSTN Portal. Any mistake in the filed return for the month of July to Sept 2017 can be revised in the next quarters return only.

Important Notes for Composition Dealers:

• No Input Tax Credit (ITC) will be made available to composition levy of tax.
• Composition dealers cannot make interstate sales.
• Composition dealers are not required to maintain detailed records.
• Composition dealers cannot issue Tax Invoice.
• Composition dealers cannot charge tax from their customers. It should be pay tax out of their own pocket.
• Composition dealers must issue Bill of Supply instead of Tax Invoice and should mention 'composition taxable person' not eligible to collect tax on supplies on their top of Bill of supply.

Content of Bill of Supply:

• Name, Address and GSTIN of the supplier
• Bill of supply Number and Date of Issue (BOS will have a unique number in financial year)
• If the recipient has registered then the Name, Address and GSTIN of the recipient.
• Description of goods/services
• HSN Code for goods and Accounting code for Services.
• Value of goods/services after adjusting any discount
• Signature or Digital signature of the supplier

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice. Neither the authors accept any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.