ser GST: Change in Tax Rates for Composition Taxpayers (Updated) GST: Change in Tax Rates for Composition Taxpayers (Updated)

Change in GST Tax Rate and tax base for taxpayers registered under Composition Scheme as amended from time to time by various notifications including the recent recent scheme of GST on a presumptive basis.

1. Notification No. 08/2017 CT- dated 27 June 2017 :-GST Rates for composition taxpayers are notified vide Notification No. 08/2017 CT- dated 27 June 2017 .

Composition Scheme – Applicable GST Rates

(Notification No. 08/2017 CT- dated 27 June 2017)

Type of Business CGST SGST TOTAL
Manufacturer 1% 1% 2%
Supplier of food & drinks (restaurant business) 2.5% 2.5% 5%
Traders (Other Suppliers) 0.5% 0.5% 1%
Service Providers Supplier of services (Except supplier of food and non-alcoholic drinks) cannot opt composition scheme.
Applicability period :- These Rates are applicable from 01 July 2017 to 31st Dec 2017

2. Notification No. 01/2018 dated 01 Jan 2018 :- CBEC vide Notification No. 01/2018 dated 01 Jan 2018 reduced GST Rates for manufacturer who have opted composition scheme

CBEC has also notified that for other suppliers who have opted for composition scheme, now only turnover of taxable supply of goods will be taxed at half percent rather than aggregate turnover at half percent.

New rates vide Notification No. 01/2018 dated 01 Jan 2018 is as tabulated below

Composition Scheme – Applicable GST Rates

(Notification No. 01/2018 dated 01 Jan 2018)

Type of Business CGST SGST TOTAL
Manufacturer and Traders 0.5% 0.5% 1%
Supplier of food & drinks (restaurant business) 2.5% 2.5% 5%
Service Providers ( Except for restaurant services ) Not eligible for composition scheme .
Applicability period :- These Rates are applicable from 01 Jan 2018 to 31st Jan 2019

3. CGST AMENDMENT ACT 2018 :- The Central Government has amended CGST Act 2017 & IGST Act 2017 . Significant amendments made in CGST Act which has been notified on 30th Aug 2018 . GST Amendment Act is effective w.e.f. 01 Feb 2019

Composition Scheme – Applicable GST Rates

( CGST AMENDMENT ACT 2018- W.E.F 01 FEB 2019)

Type of Business CGST SGST TOTAL
Manufacturer and Traders 0.5% 0.5% 1%
Supplier of food & drinks (restaurant business) 2.5% 2.5% 5%
Service providers 0.5% 0.5% 1%
Composition dealers may supply services of value not exceeding- 10% of turnover in a State or Union territory in the preceding financial year or 5 Lakhs, whichever is higher..
Applicability period :- These Rates are applicable from 01 Feb 2019 to 31st March 2019

4. GST PRESUMPTIVE SCHEME :- The Central Board of Indirect Taxes (CBIC) has notified a New Scheme in GST vide Notification No. 2/2019-Central Tax (Rate), dated March 7, 2019 in which a tax payer has been allowed to pay GST on a presumptive basis at the rate of 6% (3% CGST and 3% SGST/UTGST).

Though , notification does not refer to section 10 of the CGST Act 2017 , It is similar to the existing composition scheme

CURRENT RATES OF COMPOSITION SCHEME & PRESUMPTIVE SCHEME

APPLICABLE GST RATES (COMPOSITION SCHEME & PRESUMPTIVE SCHEME)
Type of Business CGST SGST TOTAL ( COMPOSITION SCHEME) TOTAL (PRESUMPTIVE SCHEME )
Manufacturer and Traders 0.5% 0.5% 1%
Supplier of food & drinks (restaurant business) 2.5% 2.5% 5%
Goods & Services (deemed as composite supply) 0.5% 0.5% 1%

Provided turnover of services does not exceeds 10% of total turnover in preceding year or Rs 5 Lakh , whichever is higher

Goods or services or both  (deemed as mixed supplies) 3% 3% ‘-  

6%

Applicability period :- These Rates are applicable from 01 April 2019 to till date

5. SALIENT FEATURES OF PRESUMPTIVE SCHEME

If registered person is eligible to take the benefit of this scheme, he shall pay GST at the rate of 6% (3% CGST and 3% SGST/UTGST) on his total supply up to Rs. 50 lakhs. If turnover from goods or services or both (mixed supplies) during the current year exceeds this limit, he shall continue to be eligible to avail of this scheme in that year. However, the benefit of concessional tax shall be available on the turnover of first Rs. 50 lakhs and the turnover which exceeds this limit shall be subject to GST as per the applicable rates.

The supplier opting for this scheme shall pay GST at the rate of 6% on all supplies made by him, irrespective of the fact whether such supply is exempt from tax or has different tax rates. For payment of tax, he is not allowed to claim the credit of taxes paid for inputs, input services or capital goods so procured by him. Meaning thereby he shall be paying GST at the rate of 6% from his pocket.

Where supplier has taken the GST registration for the first time, the presumptive tax at the rate of 6% shall be payable on the supplies made by him only after the date of registration.

(Article is republished with amendments by Taxguru Team & CA Anita Bhadra)

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44 Comments

  1. tanka sarma says:

    a milk co-operative societythey sales fresh milk in loose, also sales in packeting and also make sweets namkin and curd and cream and also ghee what will be the gst rate for ,

  2. sambasivarao Ghattamaneni says:

    Dear Sir
    One clarification of my question “A” Firm was have Composition License there is Purchase, Sale of Goods and Same Firm was Service Provided How can let apply CGST Tax and SGST Tax.(1% or 6%).

    1. sambasivarao Ghattamaneni says:

      Dear Sir
      One clarification of my question “A” Firm was have Composition License there is Purchase, Sale of Goods and Same Firm was Service Provided How can let apply CGST Tax and SGST Tax.(1% or 6%).

  3. Dharmesh Gupta says:

    The above article is very useful to composisition taxpayers ,but as per my openion as per notification no-1/2018of cgst traderes /othersuplieres or taxpayers whoes registeration is of manufacturer as well as other suppliar or trader need to pay 0.5%+0.5% on their taxable supplies only &on traded supply which is exepmt in a state or intra state does not atract any tax liabilty for supplies made?Am i right or wrong can anybody clearyfy ,many thanks in advance.

  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

      1. 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.

    1. 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. 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?

  7. 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.

  8. 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….

  9. 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

    1. 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.

  10. 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 ?

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