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Turnover of composition dealer

Manjur Khanushiya (239 Points)

15 April 2020

Is Exempted supply is includes while calculating tax under composition ?

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Rajkumar Patel (602 Points)
Replied 15 April 2020

Yes... but only one Exempt supplies shall be excluded i.e Interest on extending deposite

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RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 15 April 2020

No... Exempted supply is exempted. It's not taxable in anywhere of GST act.

Manjur Khanushiya (239 Points)
Replied 15 April 2020

As per section 10 there is the word aggregate turnover and in aggregate turnover exempted includes

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RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 15 April 2020

Dear.,

Better to refer the query correctly...

Don't be confuse about "AGGREGATE TURN OVER" and "CALCULATING TAX".

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Manjur Khanushiya (239 Points)
Replied 15 April 2020

Yes that's why I wanted to know on which turnover Composition tax is leived

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RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 15 April 2020

As per my view.,
Composition dealer can't supply exempted goods...

Shivam RC (Student) (23683 Points)
Replied 16 April 2020

@ Mr. Manjur Sir and Raja Sir,

As per the Provision of Section 10(2) clause (b) of the CGST Act 2017, Read with Rule 5 of the CGST Rules 2017, a person who has opted to pay tax under the Provision of Section 10(1) of the CGST Act 2017 i.e. COMPOSITION SCHEME , "is not eligible to make any supply of goods which are not 'leviable to tax' under this Act" i.e. NON-TAXABLE SUPPLY.

The Provision does not restricts the Composition Scheme dealer to supply EXEMPTED SUPPLY. Only restrictions is on NON-TAXABLE SUPPLY like Alcoholic liquor for human consumption, 5 Petroleum products etc.

Now as far computation of Aggregate Turnover is concerned, it is computed in accordance with the Provision of Section 2(6) of the CGST Act 2017 i.e. "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 reverse charge basis), exempt supplies ( except INTEREST INCOME ), exports of goods or services or both or inter state supplies of person having the same permanent account number to be computed on all India basis but excludes CGST, SGST, IGST, UTGST and cess.

Therefore, the exempt supply is also taken into consideration while computing Aggregate Turnover of a Composition Scheme dealer ( except INTEREST INCOME ).

Now, as far as the GST Rates are concerned, it is as follows :

MANUFACTURERS : 1% ( 0.5% CGST + 0.5% SGST ) of the "turnover in the State/UT".

FOOD/RESTAURANT SERVICES : 5% ( 2.5% CGST + 2.5% SGST ) of the "turnover in the State/UT."

OTHER SUPPLIERS ( TRADERS ) : 1% ( 0.5% CGST + 0.5% SGST ) of the turnover of "TAXABLE" supplies in the State/UT.

As per "Notification No. 1/2018 - Central Tax (R), dated 23.01.2018", an amendment was done regarding the rate applicable and calculation procedure incase of TRADERS i.e. "half percent of the turnover of TAXABLE SUPPLIES OF GOODS" in the State or Union Territory.

In this regard, attention is drawn on the expression "TAXABLE SUPPLIES OF GOODS" in case of Traders.

We note that the expression TAXABLE SUPPLIES is missing in the rate entries applicable to manufacturers and restaurant service providers. Therefore, the said 2 classes of persons would be liable to pay tax on the turnover in State , whether or not the supplies are "exempted from tax".

CONCLUSION :

1). Incase of TRADERS : Composition Scheme dealers have to pay tax only on "TAXABLE SUPPLIES" of Goods in State/UT. ( i.e. Exempt Supply to be ignored ).

2). In case of Manufacturer/Restaurant Service Provider : Composition Scheme dealers have to pay tax on turnover in State/UT. ( i.e. EXEMPT SUPPLY should also be taken into consideration while computing Net Tax Payable ).

Regards
Shivam RC.

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