The Ministry of Finance has issued the first notification for the year 2018 by reducing the tax rates for the composition taxpayers vide Notification No. 1/2018- Central Tax dated 1st Jan 2018. Similar Notification also been issued under UTGST Act 2017 vide Notification No. 01/2018-Union Territory Tax,dt. 01-01-2018. The tax rates change for the composition taxpayers is applicable for manufacturers and traders.

Sl. No Category of Composition Tax Payer As per  Notification No. 8/2017-Central Tax As per Notification No. 1/2018- Central Tax
1 Manufacturer 1% 0.5%
2 Trader half per cent. of the turnover in State in case of other suppliers: “half per cent. of the turnover of taxable supplies of goods

The above notification is a welcome move to the composition taxpayers as the tax burden for the manufacturer is being reduced from 2% to 1% which makes the Micro and Small manufactures to supply to the manufactures as they can easily absorb the cost and the buyer can also have inward supplies from them thereby supporting the ecosystems and giving a flip to the Make in India policy.

In case of traders, who are dealing in both taxable and non-taxable supplies, was paying GST thereby defeating the whole concept of non-taxable supplies as the wording used is “supplies” now this is fixed with the usage of the wordings “taxable supplies”.

The effective date of the rate changes is from 1st day of January 2018.

(Article been corrected with effective date of rate change)

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38 responses to “GST: New Change in Tax Rates for Composition Taxpayers”

  1. tejas says:

    composition scheme levy for notgst item& gst item ?

  2. M.K.Shukla says:

    Kinly provide the Latest rates applicable on outdoor catering of food under composition scheme

  3. Vishwanath P Dalali says:

    Sir what about these bakery who are manufacturer and retailer

  4. DHARMESHGUPTA says:

    If a composisition dealer is manufacturer in one product &trader also in allied exempted as well as taxable goods .
    What will be the composite tax implications ,I.e.is he has to pay for nil rated or exempted supply also?please clarify

  5. ARVIND SHAH says:

    IT SEEMS THAT FOR TRADERS THERE IS NO CHANGE IN TAX RATE I. TOTAL 0.5+0.5. CGST AND SGST RESPECTIVELY ONLY CHANGE IS THAT FOR TAX FREE GOODS SUPPLY THERE WILL BE NO TAX. WHAT ABOUT INTER STATE SALE. RATE WILL 1% FOR TRADERS UNDER COMPOSITION

    • CMA Bhogavalli Mallikarjuna Gupta says:

      Yes very much true.. That is what the change made. Now they have clearly specified only taxable supplies

      • Adv Vivek Saraswat says:

        Inter State Supply under Composition Scheme of GST is not allowed till yet. Pl Refer Section 10(2)(c) of CGST Act. For Inter State Supply UNDER COMPOSITION, Amendment is required in CGST & SGST Act.

    • Adv Vivek Saraswat says:

      Inter State Supply under Composition Scheme of GST is not allowed till yet. Pl Refer Section 10(2)(c) of CGST Act. For Inter State Supply UNDER COMPOSITION, Amendment is required in CGST & SGST Act.

  6. Ankush Oswal says:

    Doers Half Percent Of Taxable Turnover Includes Exempt Supplies Made?????

  7. GST-curious says:

    Since the effective rate is 1 july 2017,what about the tax paid using the rates of 2%for manufacturers and non taxable supplies turnover of traders…….Should we ask for a refund of the same?

  8. Dattaraj Jedgule says:

    Sir,
    a regular dealer can carry forward his GST credit in composition scheme, if he apply now ???

  9. Shriram Bajaj says:

    In my opinion the effective date would be the date of notification i.e. 01.01.2018 and not 01.07.2017 as stated by the author. However, if there is judicial precedent for considering effective date retrospectively in case of amending notification, the author may point out the same for benefit of all.

  10. Piyushbafna says:

    How it can be 1st July 2017…. Because if we read original and latest notification … There is no conclusion to say 1st July 2017….

  11. Sandeep says:

    what will be the effect for traders who have already paid 1% for 1st qtr

  12. Sandeep Gala says:

    what will be the effect for traders who has already paid 1% for 1st qtr?

  13. Sandeep Gala says:

    What will be the effect for traders who have already paid as 1% for 1st qtr ?

  14. Raghav Sharma says:

    What does this Mean:
    Composite Manufacturer will pay 1% GST in case of Local Sale and 0.5% in case of Inter State Sale

    Also for Composite Traders 1% in case of Local and 0.5% GST in case of Inter State.

    This is Retrosepective Amendment Starting From 1July2017.
    Please Correct me if i am wrong. Thanks in advance

    • Adv Vivek Saraswat says:

      Inter State Supply under Composition Scheme of GST is not allowed till yet. Pl Refer Section 10(2)(c) of CGST Act. For Inter State Supply UNDER COMPOSITION, Amendment is required in CGST & SGST Act. At Present Composition Scheme is available within State Supply Only.

  15. Astaf says:

    In notification nowhere it is mentioned that the effective date is 1st July,2018.
    So According to me effective date should be 1st Jan, 2018 i.e. date of notification.
    Whats your views ?

  16. khaleel sayed says:

    2018

  17. khaleel sayed says:

    I do not think the new rates are effective from 01.07.2017. but they are effective from 01.01.2008

  18. Aliasgar says:

    The said Notification does not provide specific date for its effectiveness and hence 1 January 2018 is the effective date.

  19. Mahesh Deshmukh says:

    Dear Sir,
    Please confirm the effective date of the this notification.

  20. Samir Tejura says:

    The effective date of the rate changes is from 1st of July 2018.
    Or 1st of January 2018?

  21. POOJA SHAH says:

    Effective date – 1st of July 2018. Is this correct????

  22. N Chandrashekhar says:

    More information on the implication of GST on service sector is requested.

  23. N Chandrashekhar says:

    Very good information. But more clarification with respect to service providers are required. Is it possible to update?

  24. rajubhai says:

    The effective date of the rate changes is from 1st of July 2018.

    error in year 2018 >>>. 2017

    please change year

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