GST Composition Scheme : Proposed Amendment in GST Act

By | July 9, 2018
(Last Updated On: July 12, 2018)

GST Composition Scheme : Proposed Amendment in GST Act

As per Draft Proposal for Amendments GST Laws released on 09.07.2018 following are the proposed amendment in section 10 of CGST act 2017 [ Section 10(1) and (2) of CGST Act 2017 ]

Video Explanation by CA Satbir Singh regarding changes proposed  in GST Composition Scheme

Section/Subsection/ClauseAmendments as shown in Red and StrikethroughRationale/Remarks
Composition Scheme

10 (1) & (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10 (1)  Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of
section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding,––
(a) one per cent of the turnover in State or turnover in Union territory in case of a manufacturer,
(b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and(c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers,subject to such conditions and restrictions as may be prescribed:Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not
exceeding one hundred and fifty lakh crore rupees, as may be recommended by the Council.Provided further that a person who opts to pay tax under clause (a), clause (b) or clause (c) may supply services of value not
exceeding ten percent of turnover in the preceding financial year in a State or Union territory or five lakh rupees, whichever is higher.(2) The registered person shall be eligible to opt under sub-section (1), if—
(a) he is not engaged in the supply of services, other than supplies referred to in clause (b) of paragraph (6) of Schedule II save as provided in sub-section (1);(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods;

(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and

(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:

Provided that where more than one registered persons are having the same Permanent Account Number (issued under the Incometax Act, 1961) (43 of 1961), the
registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section.

The proposed amendments seek to remove any interpretational ambiguity to state that the composition tax payers shall, in lieu of the tax payable on the invoice value of the transactions under section 9(1) (applicable to regular taxpayers), pay tax as a percentage of their turnover.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The limit is being raised from Rs. 1 crore to Rs. 1.5 crore as a measure of trade facilitation, as already recommended by the GST Council.

 

At present, registered persons engaged in the supply of services (other than restaurant services) are not eligible for composition scheme. As a result, manufacturers and traders supplying services are unable to opt for the scheme even if its percentage is very small as compared to the supplies of goods. With a view to enable these taxpayers to avail of the benefit of composition scheme, a new proviso is being added in order to allow them to be eligible for the scheme even if they supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or Rs. 5 lakhs, whichever is higher. This is a taxpayer-friendly measure and it is believed that small taxpayers would immensely benefit from this amendment.

 

This is a consequential amendment, as a new proviso is being added to section 10 (1) which allows the registered person to opt for the scheme even if they supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or Rs. 5 lakhs, whichever is higher.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Also refer Section 9(4) of CGST Act : Proposed Amendment (Reverse Charge)

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