CA Surendra Agrawal

CA Surendra AgrawalPresently, several State Governments have provisions for payment of a Composition levy of VAT for specified small businesses which makes compliance of tax laws easier without having to maintain copious records, registers and returns.

Secrtion-10 Central Goods and Services Tax Act, 2017. contains provisions for Composition Scheme permitting the tax payer to opt for payment of GST as a fixed percent on turnover instead of paying tax under regular provisions of the law.

1 Applicable to a registered Taxable Person Eligible even if registered voluntarily
2 Having Aggregate Turnover < Rs.50 lakhs Aggregate Turnover includes value of Taxable and Non-Taxable Supplies, Exempted and Export Supplies too. Does not include Taxes levied under GST and Value of Inward Supplies
2 Needs to make an application Even where the person is under Composition under the current VAT law, it is advisable to make the application under GST
4 Will need to pay taxes at usual rates on RCM,

if applicable

Reverse Charge Mechanism u/s 7(3) would apply even for such persons
1 Cannot effect Inter State Supplies However, Inter State purchases are permitted
2 Aggregate Turnover to be computed across all Business Verticals and across the country for each PAN number Aggregate Turnover determined on pan India basis, for the respective Income Tax PAN no.
3 The person is not permitted to collect GST GST has to be borne by the person out of the Sale proceeds
4 Person shall not be entitled to Input Credits under GST Unlike persons under regular scheme, set-offs are not permitted
5 Law provides for additional conditions to be prescribed
Ease of doing business
1 Quarterly Returns As against 3 to 4 returns monthly
2 Lower rate of Tax Specified at not less than 1%. Expected to be in the region of 1% to 3%
3 In place of a Tax Invoice the document required is a Bill of Supply Convenient since details required are not as much
4 Presently, several State VAT laws permit composition, but not available for services Big boon to Service Providers since the Input Tax payment is negligible



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