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Composition tax on exempted goods

SSG (1936 Points)

12 July 2017

As per Sec. 10(2)(b), a person cannot opt for composition scheme if he is supplying goods not leviable to GST. In an answer to a question in GST Master Class - 6 dated 12th July 2017, the tax under composition scheme is to be paid on total turnover, including the exempted supply.

I am unable to understand this.

If a person doing supply of goods including exempted goods, then he is not eligible for composition scheme. How he can pay tax under composition scheme on supply of exempt goods?

Members are requested please clarify.

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11 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 12 July 2017

(including the exempted supply) means 'that person dealing taxable items and also dealing excempted items. He ll be calculate the whole transactions based tax.
Ex: Taxable goods sold Rs. 10,00,000lakhs and Excempt Goods Sold : Rs. 5,00,000. Now the total turn over Rs. 15,00,000/-. He calculatethe tax Rs. 15lakh *1%= 15000 payable....

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 12 July 2017

If only deal excempted goods he don't want to registration....

SSG (1936 Points)
Replied 12 July 2017

Originally posted by : RAJA P M
	If only deal excempted goods he don't want to registration....

Sir, person supplying only exempted goods, in any case, are not liable to register under GST. Clause (b) of sub-section 2 of section 10 of CGST Act, doesn't mention that he should be not be engaged ONLY/EXCLUSIVELY in making supply of exempted goods. The word used is ANY supply. So it ahould be taken as - A person is not eligible for registration under composition scheme if he is making even a single transcation of supply of exempted goods.

Srivalli Sama (2 Points)
Replied 12 July 2017

there is a difference between exempted goods and not leviable gst. exempted goods are generally exempt from gst like paddy, rice, food grains etc. not leviable gst goods means not covered in gst act like petrol, liquor, tobacco products etc

CA. MITHUN KHATRY (CA IN PRACTICE) (370 Points)
Replied 13 July 2017

not leviable here means goods outside the purview of GST like alcohol for human consumption, petrol crude oil etc.

for deatils please read article by CA Mithun Khatry at https://gstbible.com/blog/supply-now-then-with-reference-to-gst-in-india/

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Sreenivas Chary (2 Points)
Replied 13 July 2017

limit of com0osition

afsal (business) (27 Points)
Replied 13 July 2017

% of tax in composition 1% / 2% ??

Jayesh Doshi (Self) (177 Points)
Replied 13 July 2017

A dealer trading in textiles which was tax free in vat regime having turnover more than 75 lakh during previous year i.e. 2016-17. Now he is applying for registration under GST, can he opt for composition as a new dealer ?
If yes then any liability on closing stock of textiles ?
Considering new registration whether condition of preceeding year turnover is applicable to such dealer ?
Please reply & clarify the issue

chitrala venkatesulu (accountant) (31 Points)
Replied 13 July 2017

Originally posted by : Jayesh Doshi
	A dealer trading in textiles which was tax free in vat regime having turnover more than 75 lakh during previous year i.e. 2016-17. Now he is applying for registration under GST, can he opt for composition as a new dealer ?If yes then any liability on closing stock of textiles ?Considering new registration whether condition of preceeding year turnover is applicable to such dealer ?Please reply & clarify the issue

chitrala venkatesulu (accountant) (31 Points)
Replied 13 July 2017

Originally posted by : Jayesh Doshi
	A dealer trading in textiles which was tax free in vat regime having turnover more than 75 lakh during previous year i.e. 2016-17. Now he is applying for registration under GST, can he opt for composition as a new dealer ?If yes then any liability on closing stock of textiles ?Considering new registration whether condition of preceeding year turnover is applicable to such dealer ?Please reply & clarify the issue