CHAPTER 7

 

Small Taxable Persons – Exemptions and Composition Scheme 

(Updated as on 15-11-17)

 

Exemptions for Small taxable persons:

  1. Taxable persons having an aggregate turnover* of upto 20 lakhs are exempt.
  2. In the following special category states, taxable persons having an aggregate turnover* of upto 10 lakhs are exempt:
    Arunachal Pradesh
    Assam
    Jammu and Kashmir
    Manipur
    Meghalaya
    Mizoram
    Nagaland
    Sikkim
    Tripura
    Himachal Pradesh
    Uttarakhand

Aggregate turnover includes all supplies made by the taxable person whether on his own account or made on behalf of his principals.

 

Composition Scheme for Small Taxable Persons

Rules of the Scheme:

  1. Composition scheme can be availed by suppliers of goods whose aggregate turnover in a financial year does not exceed 1.5 Crores.
  2. The scheme is not available to suppliers of services except restaurant service.
  3. The taxpayer has to pay a fixed percentage of his gross turnover as tax. The proposed rates are as follows:
    0.5% of turnover in State or UT in case of a manufacturer or trader (goods)
    2.5% of turnover in State or UT in case of restaurants not serving alcohol.
  4. There will be equal SGST. Thus, total tax will be double the aforesaid rates.
  5. The scheme is optional and lapses once the turnover exceeds the threshold limit.
  6. Where more than one registered person have the same PAN, the composition scheme will be available to the registered taxable person only if all the persons opt for the composition scheme.
  7. Only those taxable persons whose all supplies of goods are within the State can opt for this scheme.
  8. Taxable persons who opt for this scheme will not be allowed to charge GST in their invoice. They cannot show GST in their invoice.
  9. Taxable persons under the composition scheme are not entitled to Input Tax Credit.
  10. Aggregate turnover means the aggregate value of:
    All taxable supplies
    Exempt supplies
    Export of goods or services or both
    Inter state supplies of a person having the same PAN
    Excluding value of inward supplies on which tax is payable reverse charge basis
    Excluding taxes (CGST, SGST, UTGST, and IGST)
    To be computed on all India basis .
  11. He should not be engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source.
  12. He should not be a manufacturer of such goods as may be notified. This notification has the list of manufacturers not eligible for the scheme.
  13. The taxable person should not be a casual taxable person or a non resident taxable person.
  14. He should mention Composition taxable person, not eligible to collect tax on supplies at the top of the bill of supply issued by him.
  15. Taxable person under composition scheme shall issue a Bill of Supply and not a tax invoice containing such particulars and in such manner as may be prescribed u/s 31(3)(c) of CGST Act.
  16. Disadvantage of composition scheme: taxable person cannot avail ITC. He cannot charge GST on the invoice and therefore the recipient also cannot claim ITC.

 

Forms to be filed under the composition scheme

  1. Any person opting for this scheme should file an intimation in Form GST CMP-01 on the common portal within 30 days of being eligible to avail the scheme. If the taxable person is applying for a fresh GST registration, he can opt for the scheme in Form GST REG-01.
  2. Further intimation every year prior to commencement of financial year to be given in Form GST CMP-02.
  3. Details of stock and inward supplies from unregistered dealers as on the previous day of availing the option also to be filed in form GST CMP-03 within 60 days of exercising the option.
  4. Details of Input Tax Credit available to be filed in Form GST ITC-03 within 90 days of date of levy.
  5. Intimation of withdrawal of the scheme to be filed in Form GST CMP-04.
  6. GST CMP-05 – Proper officer can issue show cause notice as to why composition option should not be denied.
  7. GST CMP-06 – Reply to show cause notice by taxable person should be in this Form.
  8. GST CMP-07 – Officer’s order will be in this Form either agreeing or denying the option.
  9. Details of inputs available in stock, finished and semi-finished goods to be filed in Form GST ITC -01 within 30 days of intimation of withdrawal.

 

Returns and due dates under the scheme

  1. Quarterly return within 18 days after the end of each quarter in Form GSTR 4. However, the GST council in its 23rd meeting has extended the date for filing returns of July-September 2017 to 24th December 2017.
  2. Annual Return in Form GSTR 9A within 31st December of next financial year.
  3. Tax to be paid quarterly before filing the return.