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


    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 , he has to pay for nil rated or exempted supply also?please clarify

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