Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

gst compostion scheme

karan vij (64 Points)

20 July 2018

plse explain section 10(2) read with section 2(6) meaning of inter state supplies makes chaos

Reply
Follow
Share

1 Replies

Shivam RC (Student) (23683 Points)
Replied 21 July 2018

In order to give relief to the Small Taxpayers from the Heavy Compliance burden under GST , the Government has introduced the COMPOSITION SCHEME for the Small Taxpayers whose Aggregate Turnover does not exceed the prescribed Threshold Turnover limit.

SECTION 10 of the CGST Act 2017 describes the Provisions of the COMPOSITION SCHEME.

Conditions and Restrictions :-

【SECTION 10 (2) read with Rule 5 of the CGST Rules , 2017 】

(1). As per Section 10 (2), the registered person shall be eligible to opt this scheme,if : -

(a). he is not engaged in the supply of SERVICES other than supplies referred to in clause (b) of paragraph 6 of SCHEDULE II ( Restaurant Service Provider);

(b). he is not engaged in making any Supply of Goods which are not leviable to Tax under this Act (Non Taxable Supply);

(c). he is not engaged in making any INTER-STATE Outward Supplies of Goods;

(d). he is not engaged in making any Supply of Goods through E- Commerce Operator who is required to collect Tax at Source (TCS) u/s 52; and

(e). he is not engaged in manufacturer of following Notified Goods in the Current Year and also in the preceding Financial Year -

• Ice Cream and other edible ice, whether or not
containing cocoa.
• Pan Masala
• Tobacco and manufactured tobacco substitutes

(f). where more than one Registered Person are having the same PAN, the registered person shall not be eligible to opt for the scheme unless all such registered persons opt to pay tax under Composition Scheme.
[ This means that if a person who has Registration in 2 different States with the same PAN , then he should opt for Composition Scheme for both the business Verticals. One cannot opt for Composition Scheme of 1 branch and Normal Registration in another branch. ]

(2). He shall not collect any Tax from the recipient on supplies made by him nor shall he be entitled to claim any credit of INPUT TAX. [ Section 10 (4) ].

NOTE : The COMPOSITE DEALER is not eligible to make any INTER-STATE Outward Supplies. However, he is allowed to make Inter-state Inward Supplies ( Purchase ). Also note that he will be liable to pay tax u/s 9(3) or u/s 9(4) on inward supply of goods or services or both.

Analysis of SECTION 2(6) :

AGGREGATE TURNOVER

As per Section 2(6) of the CGST Act 2017 , "aggregate turnover " means the " aggregate value of all taxable supplies ( excluding the value of inward supplies on which tax is payable by a person on RCM basis) , exempt supplies , export of goods or services or both and Inter State Supplies of person having the same PAN , to be computed on all India basis but excludes CGST SGST, UTGST, IGST and CESS."

But, since the Composite Dealer is not allowed to make any INTER-STATE Outward Supplies of Goods or Services or both , so the question of including the value of Inter State Outward Supplies doesn't arise.

Therefore , the Aggregate Turnover of the Composite Dealer will be computed on the basis of turnover on an all India basis and will INCLUDE value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would EXCLUDE inward supplies under RCM as well as CGST, SGST, UTGST, IGST and Cess.

So at the end of the day , Inter State Supplies will not be included in the Aggregate Turnover of person's taking registration u/s 10 of CGST Act 2017.

I hope your doubt is clear now.....

Regards

Shivam Roy Chowdhury.

1 Like