For small assesses compliance with Indian tax laws has always been a challenge. Forcing such assesses for compliance may not yield much revenue to exchequer. It may in fact alienate them from the mainstream and they maybe get into the parallel economy. Therefore, most of the indirect tax laws in past provided for composition scheme for assesses with benefits such as provision of filing of quarterly return instead of regularly monthly return, payment on quarterly basis, collection and payment of tax at much lower rate than regular rates.
The following changes were recommended in the Composition Scheme on the basis of discussions held in the 23rd meeting of the GST Council held at Guwahati.
- i. Uniform rate of tax @ 1% under composition scheme for manufacturers and traders (for traders, turnover will be counted only for supply of taxable goods). No change for composition scheme for restaurant.
- ii. Supply of services by Composition taxpayer upto Rs 5 lakh per annum will be allowed by exempting the same.
- iii. Annual turnover eligibility for composition scheme will be increased to Rs 2 crore from the present limit of Rupees 1 crore under the law. Thereafter, eligibility for composition will be increased to Rs. 1.5 Crore per annum.
- iv. The changes recommended by GST Council at (ii) and (iii) above will be implemented only after the necessary amendment of the CGST Act and SGST Acts.
- v. GST under composition scheme will be required to be paid only on taxable goods for traders and not on total turnover.However to calculate upper ceiling of One crore or 1.5 crore ,total turnover is to be considered.
Now CBEC has issued to give effect to the Point no (i) and (v) above i.e now 1 % rate under composition scheme will be applicable on Manufactures as well as traders.Further The tax will be calculated only on taxable turnover only and not on total turnover.
However to calculate eligibility of scheme the total turnover(Taxable as well as exempted) will be calculated.
Updated Revised rates after under composition scheme is as under.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY PART II, SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) Notification No. 1/2018- Central Tax New Delhi, the 1 st January, 2018
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 10 of the Central Goods and Services Tax Act, 2017 (12 of 2017) the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.8/2017- Central Tax, dated the 27 th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 647 (E), dated the 27 th June, 2017, namely:-
In the said notification, in the opening paragraph, -
(a) in clause (i), for the words “one per cent.”, the words “half per cent.” shall be substituted;
(b) in clause (iii), for the words “half per cent. of the turnover”, the words “half per cent. of the turnover of taxable supplies of goods” shall be substituted.
[F. No. 354/320/2017- TRU]
Under Secretary to Government of India
Note: - The principal notification No.8/2017-Central Tax, dated the 27 th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 647(E), dated the 27 th June, 2017 and last amended by Notification No. 46/2017-Central Tax, dated 13th October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number GSR 1287 (E), dated the 13th October, 2017.