Composition Levy under GST
Small taxpayers can opt to pay tax at a flat rate and opt for composition of tax if their annual aggregate turnover is within 75 lakhs. This option is available for certain special category of manufacturers and service providers also. No input tax credit is available for a compounding dealer. Compounding dealer cannot issue a tax invoice but only a bill of supply. Compounding dealers are not permitted to collect tax.
Persons not eligible for Composition
(a) Supplier of Services other than Supplier of Restaurant service
(b) Neither a Casual Taxable person nor a Non-Resident Taxable person.
(c) An Inter State supplier of Goods
(d) Persons supplying Goods through e-commerce operator
(e) Manufacturers of certain notified goods
Composition Rate
(a) For manufacturers, SGST 1% + CGST 1%
(b) For hotels other than Liquor SGST 2.5% + CGST 2.5%
(c) For others SGST 0.5% + CGST 0.5%
Return of a composition dealer
A composition dealer instead of filing monthly return, has to file return for each quarter in GST-4 within 18 days after the end of such quarter. In GSTR-4, Invoice wise details of inter-state and intra-state supplies received from registered persons as well as unregistered persons, imports of goods and services, consolidated details of outward supplies consolidated statement of advances paid/advances adjusted on account of receipt of supplies, debit note, and credit note received and issued have to be reported.
Conditions for Composition
(b) The Goods in Stock must not have been purchased from Un-registered Dealers, and if purchased tax has to be paid under Reverse charge mechanism.
(c) Composition dealers have to issue Bill of supply instead of Invoice
(d) In the Bill of supply, such dealer should mention "Composition Taxable person not eligible to collect tax on supplies."
(e) In Sign boards at prominent place of business he shall mention the words "Composition Taxable person."
Cancellation of registration
Failure to file returns for 3 consecutive tax period will lead to cancellation of registration.
Transitional Provisions
Dealer paying tax in the composition scheme under the earlier law but decided to pay tax under section 9 of the GST law (i.e. Regular dealer (, shall be eligible for ITC in GST on the closing stock of goods purchased locally.
A dealer availing ITC under the earlier law but decided to become a composition dealer under Section 10 of the GST Law, shall have to pay an amount equivalent to the credit of input tax.
TIME OF SUPPLY OF GOODS
Under GST, the point of taxation, the liability to pay CGST/SGST will arise at the time of supply as determined for Goods & services.
The time of supply of Goods shall be the earlier of the following dates, namely: -
(a) The date of issue of invoice by the supplier (or the last date on which he is required to issue the invoice)
(b) The date on which the supplier receives the payment with respect to the supply.
The time of supply of goods where tax is to be paid on reverse charge shall be the earlier of the following dates, namely: -
(a) The date of receipt of goods, or
(b) The date of payment
(c) 30 days from the date of issue of invoice by the supplier (If it is not possible to determine under (i,ii & iii) the date of entry of supply in the books of the recipient)
The time of supply of goods in case of vouchers shall be the earlier of the following dates, namely: -
(a) The date of issue of voucher; or
(b) The date of redemption of voucher. (If the date could not be determined then the date of periodical return filed or the date on which the CGST/SGST is paid
Time of supply of services
The time of supply of services shall be the earliest of the following dates, namely: -
(a) The date of issue of invoice or
(b) The date of receipt of payment
The time of supply of services where tax is to be paid on reverse charge shall be the earlies of the following dates, namely: -
(a) The date of receipt of payment or
(b) 60 days immediate from the date of invoice. If it is not possible to determine under (i) or (ii), the date of entry.
