HEN CODE
This query is : Resolved
23 August 2017
My friend having cotton packages business.. He supplies cotton packages to other businesses.. His turnover is less than 6 laks.. Whether he may opt for composition scheme or not?
Which HSN CODE Is applicable for his business??
23 August 2017
Yes he can opt composition
24 August 2017
The product description is not very clear. What exactly do you mean by Cotton Packages. If you can be more descriptive or share a link to what you are referring to, it may be helpful in arriving at a conclusion.
HSN Codes 5201 - 5203 deals with Cotton & Cotton Waste and is taxable at 5%
HSN Code 5601 deals with Wadding of textile materials and articles
thereof; such as Absorbent cotton wool and is taxable at 12%
In case of composition these rates will not apply.
HSN Codes 5201 - 5203 deals with Cotton & Cotton Waste and is taxable at 5%
HSN Code 5601 deals with Wadding of textile materials and articles
thereof; such as Absorbent cotton wool and is taxable at 12%
In case of composition these rates will not apply.
24 August 2017
TV, fans, iron box, washing machine cotton boxes
28 July 2024
For a business dealing with the supply of cotton packages and related goods, here’s how the GST Composition Scheme and HSN codes would apply:
### **1. GST Composition Scheme Eligibility:**
The GST Composition Scheme is available for small taxpayers who meet the following criteria:
- **Turnover Limit:** The aggregate turnover should be less than ₹1.5 crore in a financial year (₹75 lakh for special category states, except for Jammu and Kashmir).
- **Type of Supply:** The scheme is available for traders, manufacturers, and service providers, but there are specific conditions. For manufacturers, the scheme does not cover the supply of services or goods that are exempt from GST.
Given that your friend's turnover is less than ₹6 lakhs, he is well below the threshold for the Composition Scheme. However, the key points to consider are:
- **Nature of Goods:** If the cotton packages supplied are considered as "goods" and the business does not involve any other non-compliant activities (like exempt supplies), he may be eligible for the Composition Scheme.
- **Input Tax Credit (ITC):** Under the Composition Scheme, ITC on inputs and input services is not available.
### **2. HSN Code for Cotton Packages:**
For GST purposes, the Harmonized System of Nomenclature (HSN) codes are used to classify goods. The HSN codes relevant to your friend's business, particularly for packaging and related items, are:
- **HSN Code for Cotton Packages:** Typically, the code for cotton packaging materials would fall under the general category for cotton and its products. Cotton packages or bags might be classified under:
- **HSN Code 6305**: "Sacks and bags of a kind used for the packing of goods" (for packaging bags).
For **other products** like:
- **TV, Fans, Iron Box, Washing Machine**: HSN codes will vary based on the product. For instance:
- **TV:** 8528
- **Fans:** 8414
- **Iron Box:** 8516
- **Washing Machine:** 8450
### **Steps for Opting for Composition Scheme:**
1. **Check Eligibility:** Confirm that your friend's business activities and turnover fall within the eligibility criteria for the Composition Scheme.
2. **Apply for Scheme:** If eligible, the business must apply for the Composition Scheme through the GST portal (Form GST CMP-01 or GST CMP-02, depending on the circumstances).
3. **Compliance:** Ensure compliance with the regulations under the Composition Scheme, including the payment of tax at a fixed rate of turnover and maintaining proper records.
### **Conclusion:**
- **Eligibility:** Your friend can opt for the Composition Scheme if his turnover remains below ₹1.5 crore and he is not engaged in exempt supplies.
- **HSN Codes:** Use HSN code 6305 for cotton packages and the respective codes for the other products.
Make sure to regularly consult with a GST practitioner or accountant to ensure compliance with the latest GST rules and updates.
### **1. GST Composition Scheme Eligibility:**
The GST Composition Scheme is available for small taxpayers who meet the following criteria:
- **Turnover Limit:** The aggregate turnover should be less than ₹1.5 crore in a financial year (₹75 lakh for special category states, except for Jammu and Kashmir).
- **Type of Supply:** The scheme is available for traders, manufacturers, and service providers, but there are specific conditions. For manufacturers, the scheme does not cover the supply of services or goods that are exempt from GST.
Given that your friend's turnover is less than ₹6 lakhs, he is well below the threshold for the Composition Scheme. However, the key points to consider are:
- **Nature of Goods:** If the cotton packages supplied are considered as "goods" and the business does not involve any other non-compliant activities (like exempt supplies), he may be eligible for the Composition Scheme.
- **Input Tax Credit (ITC):** Under the Composition Scheme, ITC on inputs and input services is not available.
### **2. HSN Code for Cotton Packages:**
For GST purposes, the Harmonized System of Nomenclature (HSN) codes are used to classify goods. The HSN codes relevant to your friend's business, particularly for packaging and related items, are:
- **HSN Code for Cotton Packages:** Typically, the code for cotton packaging materials would fall under the general category for cotton and its products. Cotton packages or bags might be classified under:
- **HSN Code 6305**: "Sacks and bags of a kind used for the packing of goods" (for packaging bags).
For **other products** like:
- **TV, Fans, Iron Box, Washing Machine**: HSN codes will vary based on the product. For instance:
- **TV:** 8528
- **Fans:** 8414
- **Iron Box:** 8516
- **Washing Machine:** 8450
### **Steps for Opting for Composition Scheme:**
1. **Check Eligibility:** Confirm that your friend's business activities and turnover fall within the eligibility criteria for the Composition Scheme.
2. **Apply for Scheme:** If eligible, the business must apply for the Composition Scheme through the GST portal (Form GST CMP-01 or GST CMP-02, depending on the circumstances).
3. **Compliance:** Ensure compliance with the regulations under the Composition Scheme, including the payment of tax at a fixed rate of turnover and maintaining proper records.
### **Conclusion:**
- **Eligibility:** Your friend can opt for the Composition Scheme if his turnover remains below ₹1.5 crore and he is not engaged in exempt supplies.
- **HSN Codes:** Use HSN code 6305 for cotton packages and the respective codes for the other products.
Make sure to regularly consult with a GST practitioner or accountant to ensure compliance with the latest GST rules and updates.
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