Drawing references from the earlier legislations,the concept of Composition has been introduced. Section 9 talks about Composition Levy, wherein Upon Council recommendation, a registered taxable person can avail composition levy subject to few conditions .
- Main Features of Composition Levy
- Turnover :Taxable person whose Aggregate turnover in the preceding financial year did not exceed fifty lakh rupees can avail this scheme
- Tax rate: Taxable person availing this scheme may be permitted to pay, in lieu of the tax payable by him,an amount calculated at such rate as may be prescribed.Tax rate not fixed yet.
- Minimum Tax rate for Manufacturer :Tax rate shall not less than two and a half percent in case of a manufacturer
- Minimum tax Rates for others :one percent in any other case, of the turnover in a State during the year.
- The composition scheme does not apply to a taxable person,
- (a) Who is engaged in the supply of services; or
- (b) Who makes any supply of goods which are not leviable to tax under this Act; or
- (c) Who makes any inter-State outward supplies of goods; or
- (d) Who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under Section 56; or
- (e) Who is a manufacturer of such goods as may be notified on the recommendation of the Council:
- Some of the key points to note under the composition scheme are as follows
- From the above provisions, it is clear that the composition levy is not applicable to taxable person providing supply of Services, E commerce operators liable to collect tax at Section 56 and a taxable person engaged in Inter-state supply of Goods.
- All registered taxable persons, having the same PAN have to unanimously opt for the composition levy scheme, subject to the provisions contained under Section 9.
- The benefit of composition would not be given to some or part of the taxable persons having different registrations, under the same PAN. The composition scheme would be applicable for all the business verticals. Taxable person will not be eligible to opt for composition scheme for one vertical and regular assessment for other vertical registered under same PAN
- The day when the aggregate turnover in the financial year exceeds Rupees Fifty lakhs, the permission for composition granted to a taxable person gets withdrawn.
- The taxable person opting for the scheme of composition shall not collect any tax from the recipient of supplies nor is he liable to take any input credit.
- Return Under GST Composition Scheme return has to be filed Quarterly.
- The due date for payment of tax & filing of return is 18th of month succeeding the particular quarter. For example, for the quarter ending 30th June 2017 (Apr-Jun 2017) due date is 18th July 2017
- Taxable person availing this scheme shall file Return on Form GSTR-4 under Composition Scheme.