With the beginning of the new financial year of 2019-2020 CBIC has issued various notifications to give effect to the recommendations made during 32nd GST Council meeting, held on 10 January 2019, the said notifications have been issued to give relief to MSME sector like increase in threshold limit for registration, concessional rate of tax for service provider which are made effective from 1 April 2019.

In notification no. 10/2019 – CT dated 7th March 2019 CBIC has provided exemption in exercise of powers conferred under section 23(2) of the CGST Act, for person exclusively engaged in supply of goods, having an aggregate turnover of Rs.40 lacs from obtaining registration.

However, the above exemption is not available to following person:

  • Person required to take compulsory registration;
  • Person engaged in supply of ice-cream and other edible ice (whether or not containing cocoa), pan masala and tobacco and manufactured tobacco substitutes;
  • Person engaged in intra state supply in states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand;
  • Person who has voluntarily obtained registration; and
  • Registered persons intending to continue their existing registration.

The threshold limits for obtaining registration for suppliers exclusively engaged in supply of goods in such states is as below:

  • Threshold limits Rs. 10 Lacs for Manipur, Mizoram, Nagaland, Tripura.
  • Threshold limits Rs. 20 Lacs for Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana, Uttarakhand.
  • Threshold limits Rs. 40 Lacs for all other states/union territories.

In notification no. 14/2019 – Central Tax dated 7th March 2019 CBIC has supersede notification No. 08/2017 – Central Tax dated 27.06.2017 in order to increase the limit of threshold of aggregate turnover for person opting for composition scheme

  • The Government has increased the limit of aggregate turnover to INR 1.5 crores. person opting for composition scheme under section 10 of the CGST Act. However, for eligible registered persons in the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand, aggregate turnover limit shall be INR 75 lakhs.
  • Further, a person would not be eligible to opt for composition scheme if he is a manufacturer of ice cream and other edible ice (whether or not containing cocoa), pan masala and tobacco and manufactured tobacco substitutes.

In notification no. 02/2019 – Central Tax(rate) dated 7th March 2019 CBIC provides an eligibility to a registered person to pay tax at the rate of 6% [3% CGST and 3 % SGST] up to an aggregate turnover of INR 50 lakhs for first supply of goods or services or both made on or after 1 April 2019 in a financial year.

  • For the purpose of determining eligibility to pay tax at specified rate, the term “first supply of goods or services or both” shall include supplies from the first day of April of a financial year to the date from which he becomes liable for registration under the said Act. However, it does not include for determining tax payable.
  • Further, value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account.

The above benefit is available subject to following conditions:

  • aggregate turnover in the preceding financial year was INR 50 lakhs or below;
  • person is not eligible to pay tax under section 10(1) of the CGST Act;
  • person is not engaged in making any supply which is not leviable to tax;
  • person is not engaged in making any inter-State outward supply;
  • person is neither a casual taxable person nor a nonresident taxable person;
  • person is not engaged in making any supply through an electronic commerce operator who is required to collect tax at source; and
  • person is not engaged in making supply of icecream and other edible ice (whether or not containing cocoa), pan masala and tobacco and manufactured tobacco substitutes.
  • Where a registered person opts to pay tax at the rate of 6% then such rate of tax is payable by all such registered person having same PAN (i.e. applicable for all the branches).

In addition to above following shall be applicable:

  • Such person shall pay tax on all outward supplies at the rate of 6% notwithstanding any other notification issued under section 9(1) or under section 11 of the CGST Act. Such registered person will be liable to pay tax under RCM at the applicable rates.
  • Issue bill of supply with the description “taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies”.
  • Such person is neither eligible to collect tax nor he is entitled to claim any ITC.

Comments:

The relief to small service providers by bringing them at par with traders and manufacturers under composition scheme is a welcome move. However, recommendation made by the GST Council earlier, proposing a single annual return for persons registered under composition scheme is yet to be notified.

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9 Comments

  1. Shilpa says:

    With the same GST no., can I opt in for composite scheme for intra state transactions and charge tax for inter state transactions?

  2. Neeraj Arora says:

    Hi Parameshwar,

    What is the exemption limit on Services for FY 2019 – 20. is it 20 Lakh or 40 lakh?

    Can they be covered under Composite scheme.

    Thanks
    Neeraj

  3. sarath says:

    Dear Sir,
    In this GSTR3b vs GSTR1 statement there is shown without credit note igst amount for fy 2017-2018. what will do for claiming sir.

  4. C.A.Arun Kumar Abel, says:

    Dear Sir,
    If tax payer opt for composition scheme@ 6%.
    As per this section :
    “Such person shall pay tax on all outward supplies at the rate of 6% notwithstanding any other notification issued under section 9(1) or under section 11 of the CGST Act. Such registered person will be liable to pay tax under RCM at the applicable rates.”
    My query is :
    If taxpayer pay tax under RCM as per above provision. Can he claim input credit of that tax payment?.
    Please clarify.
    Thank you.

    1. Parameshwar J says:

      Dear Arun,
      Such person is neither eligible to collect tax nor he is entitled to claim any ITC. Henceforth, no ITC is available for tax paid under reverse charge for a composition dealer.

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