Composition_Comparision_GST Vs. UP VAT

[Ashish Mittal]

Composition Scheme Comparison Chart

Comparison of Provision Regarding Composition Scheme under Current U.P VAT Act,2008 VS Model GST Regime
S.No.	Basis	Under UP Act' 2008	Model GST Law	For Works Contractor		For Others
1	Governing Section	Section-6-Composition of tax liability	Section-9-Composition Levy	-		-
2	Eligibility	Any Person fulfilling T/o criteria (other than person engaged in Works Contract i.e. on works contractor no T/o Limit is applicable)	Person fulfilling T/O limit other than 1. Engaged in supply of services 2. Person engaged in interstate supply 3. Person making Non-Taxable Supply 4. E-Commerce Operator 5. All the taxable person has common PAN shall opt the scheme simultaneously Spl. Point: T/o Limit Applicable in case of Work Contractor unlike in UP VAT Act.	Under Current UP VAT: Eligible (No T/o Limit) Under GST: Eligible (Subject to T/o Limit)		Under Current UP VAT: Eligible (Subject to T/o Limit) Under GST: Eligible (Subject to T/o Limit)
3	Turnover Criteria	Current Year T/o-50 lakhs or less Previous Year T/o-50 lakhs or less	Current Year T/o-50 lakhs or less	T/o limit need to be complied with
4	ITC	Cannot avail and utilize ITC of the tax paid at the time of purchase	Cannot avail and utilize ITC of the tax paid at the time of receiving supply	Taxes on Input side would become part of cost
5	Tax Invoice	Cannot issue Tax invoice and pass on the credit of tax nor charge the same from customer in the invoice, it is paid on T/o of the assessee at fixed rate which form part of cost.	Cannot issue Tax invoice and pass on the credit of tax nor charge the same from customer in the invoice, it is paid on T/o of the assessee at fixed rate which form part of cost.	No tax invoice need to be issued, Ease in compliance of the same
6	Rate of Tax	1 % [Notification No : KA.NI-2-251/XI-9(2)/08-U.P.Ordi.-37-2008-Order-(5)-2008 Dated 4th February, 2008]	For Manufacturer-2.50% (Min.) Others-1% (Min.) [Not less than 2.5%/1% as per Section-9 actual rate still to be specified]	Actual rate still to be notified but an floor rate being specified in the section itself
7	Penal Provision	-	If assessee not falling in the above Scheme and opts for the same the proper officer may after giving opportunity of being heard recover tax, interest and penalty of equal amount [As per Section 9(4)]thereon as recovery under GST	Officer may after applying principles of Natural Justice initiate penal action as specified
8	TRANSITIONAL PROVISIONS	-	-	-	-
	8.1. Assessee shifting from Normal Tax Regime under Earlier law to Composition Scheme under GST	N.A	Allowed but the ITC of stock lying in the stock shall be paid by him before switching in composition scheme in GST	May apply if opted for composition scheme in GST Law
	8.2. Assessee shifting from Composition Scheme under Earlier law to Normal Tax Regime under GST	N.A	Allowed and the ITC of stock(incl. input, semi-finished goods, and finished goods) lying in the stock shall be allowed to be booked and utilize under GST regime subject to condition specified in  GST Model Law	May apply if opted for composition scheme in Earlier Law
9	Others	-	Spl. Points: 1. Optional Scheme 2. Only for small assessee subject to T/o 3. Available to both trader and Service provider 4. Can pay tax on Quarterly basis 5. Relaxation in filling of Outward and Inward supply return 6. No Need to file Annual Return	Can opt if Beneficial but giving regards to the cost benefit analysis and compliance difficulties that may be faced by the organization while going in normal tax regime

Note: For any clarification or suggestion please do contact under signed.

Ashish Mittal

(Article Assistant at S.S Khothari Mehta & Co.)

M.No.- +91-9582532845

Email Id.- [email protected]       

Discussions to this article

[Ganeshan Kalyani]

If the tax on purchases are to become cost then the price of real estate would tend to go high. In this situation would GST be a boon to the real estate sector or would be a challenge . Pls share your views in this regard.

[Ashish Mittal]

Hello Ganeshan Ji,

With regards to your Query, In context of real estates sector, taking about the inputs which are purchased by them as defined in Rule 2(K) CCR ' 2004, Presently no CCR is available for the same due to availment of abatement as provided by N/N-26/2012 provided by CG in lieu of power vested under Sec. 93 of F.A' 1994, wherein the real estate sector may apply abated rate @30% of taxable value but after fulfilling the condition that no CCR of inputs shall be availed by them. Now in Revised MGL also no ITC of inputs have been provided till date.[As per Section 17(4)(d) of Revised MGL] Also re-instated herewith for your ready reference.

Section 17 (4) Notwithstanding anything contained in sub-section (1) of section 16 and subsection
(1), (2), (3) and (4) of section 18, input tax credit shall not be available
in respect of the following:

(a)

(b)

(c)

"(d) goods or services received by a taxable person for construction of an
immovable property on his own account, other than plant and machinery,
even when used in course or furtherance of business"

So accordingly, As per my view there would be no impact in regards to the taxes on inputs utilize by them for providing the construction service.

[Ganeshan Kalyani]

In model GST law the credit is not allowed to real estate sector. In existing tax regime the abatement benefit is there which requires to forgo tax credit . However in model GST law there is no concept of abatement so full tax rate would be applicable and at the same time if credit is denied then in my view apparently the tax would be substantial. Hope you appreciate my contention .

[Ashish Mittal]

Hello Ganeshan Ji,

I completely appreciate your contention, But my point is that the cost to ultimate consumer would definitely increase but the total cost to Real Estate would be not be affected at all assuming that rates of input being same. Since earlier and now also total taxable value would be same but the ultimate effect would be due to imposition of higher rate of output tax in Revised Model GST Law, So talking about from the customer side it would be definitely increase in total cost which would also to some extent effect the sales but total cost effect in current and proposed tax regime in respect to input would be same without any effect (if rate to be ignored since applicability of various rates at different inputs) at real estate sector end. Hope I was able to substantiate my view.

Best Regards

Ashish Mittal