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Prepared by Committee on Capacity Building

Date of Preparation: 27.6.2017

1. Relevant Legal Provisions:

♣ Section 2 of the CGST Act,2017: Relevant Definitions

  • Aggregate Turnover:Section 2(6) of CGST Act, 2017;
  • Turnover in state or turnover in UT: Section 2 (112) of CGST Act, 2017
  • Reverse Charge: Section 2 (98) of the CGST Act, 2017
  • Exempt Supply : Section 2 (47) of the CGST Act, 2017
  • Non-taxable supply: Section 2 (78) of the CGST Act, 2017.

Section 10 of the CGST Act, 2017 – Composition Levy

Section 39 (2) of CGST Act, 2017- Furnishing of Return by Taxable Person under Composition levy.

CGST Rules, 2017: Rules 3 to 7 [notified vide notification No. 3/2017-Central Tax, dated 19.6.2017 (effective 6.2017)

Notification No. 8/2017-Central Tax, dated 27.6.2017 [It enhances aggregate turnover limit for availing composition Scheme from Rs. 50 lakhs to Rs. 75 lakhs except for few notified states; and prohibits manufacturer of ice cream, pan masala and tobacco & manufactured tobacco substituted from availing composition scheme].

(Also refer to the corresponding (identical) provisions in the State/UT GST Act of the State/UTin which the taxable person is registered]

2. Applicable Rates of Tax: As per Rule 7 of CGST Rules, 2017 read with Section 10(1) of the CGST Act, 2017, rates fixed for composition levy (to be paid as CGST) for different classes of persons taxable person registered in composition levy scheme are as follows:

  • Manufacturer = 1% of turnover (in a state/UT)
  • Supplier of food/drinks = 2.5 of turnover ( in a state/UT)
  • Other suppliers (i.e. trader) = 0.5% of turnover ( in a state/UT)

[Note:

  • There will be equal amount of SGST/UTGST tax payable under respective SGST/UTGST Act of the State /UT in which taxable person is registered. Thus, total tax payable will be @ double of the aforesaid rates. In other words, the overall rate of tax payable will be 2%, 5%, and 1% for manufacturer, supply of food/drink and other supplier respectively].
  • The composition taxable person will be required to pay CGST and SGST/UTGST as the rate prescribed as percentage of turnover in a State/UT as prescribed under respective CGST/SGST/UTGST Act, 2017.
  • If a composition taxable person has taxable (not being inter-state supplies) supplies in more than one state or UT, then tax liability has to be discharged by him in each State/UT (separate state-wise/ UT-wise Registration is required) in which he is making supplies.

3. Other tax liability to be discharged:

  • Any supply of goods/services on which tax is to be paid on reverse charge basis by the recipient (Ref: Section 9(3) of the CGSTAct, 2017 read with Rule 5(d) of the CGST Rules, 2017)
  • Any supply of goods/services received from non-registered supplier ( Ref Section 9(4) of the CGST Act, 2017 read with Rule 5(d) of the CGST Rules, 2017)

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