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Eligibility for composition

24 June 2017

textile is not taxable under VAT system & no registration is needed. so all the goods held in stock on appointed day is purchased from unregistered. now I want to opt for composite scheme. am I eligible. Please explain Rule 3(1)(c) which is not clear. all other conditions fulfilled. Thanking you

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177977 Points)
Replied 25 June 2017

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177977 Points)
Replied 25 June 2017

Conditions and Restrictions for Composition Levy- Rule 3 of the Composition Rules,2017

1) He shall neither be a Casual Taxable Person* nor a Non-Resident Taxable Person.

2) In case of migration of existing registration into registration under GST, option to avail composition scheme under GST can be exercised only if the goods held in stock by such taxable person, 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.

3) The goods held in Stock by him have not been purchased from an Unregistered Person and where purchased, he pays tax under Sec 9(4) i.e. Reverse Charge.

4) He shall Pay tax under Sec 9(3) & (4) on inward supplies of goods or services or both received from an unregistered person.

5) Taxable person opting to pay tax under the composition scheme is prohibited from collecting tax on the outward supplies.

6) The person opting for the scheme should not be a manufacturer of certain goods as are notified in this regard. However, there is no restriction in case the person is engaged in trading of such goods.

7) A person opting for composition scheme is not allowed to affect any supply of goods through an ecommerce portal, unless such portal is owned by the same person.

8) The taxable person should not affect any inter-State outward supplies. This means that even stock transfers to branches outside the State would not be permitted. However, insofar as it relates to inter-State inward procurements / receipts, there is no restriction.

To explain further, where a taxable person effects inter-State barter transaction (supply) or inter-State warranty contract (supply), he will not be eligible to opt for composition scheme.

Its self-explanatory, but for any clarification please revert...

Dhiraj Mehrotra (Business) (9 Points)
Replied 25 June 2017

Thanks,

Please explain Rule 3(1)(c) which is not clear. Since textile is tax free under Vat nighter me nor my suplier were registered under Vat. Due to this rule I am confused whether I am eligible for composition?