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TMI BlogFrequently Asked Questions on Composition Levy under GST dated 05-07-2017X X X X Extracts X X X X X X X X Extracts X X X X ..... of the turnover 3. Traders or any other supplier eligible for composition levy 1% (0.5% Central tax plus 0.5% State tax) of the turnover Q3. What is the eligibility category for opting for composition levy? Which are the Special Category States in which the turnover limit for Composition Levy for Central tax and State tax purpose shall be ` 50 lakhs? Ans. Composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross ` 75 lakhs. In the case of following States, limit of turnover is ` 50 lakhs:- (a) Arunachal Pradesh (b) Assam (c) Manipur (d) Meghalaya (e) Mizoram (f) Nagaland (g) Sikkim (h) Tripura (i) Himachal Pradesh Q4. Who are the persons not eligible for composition scheme? Ans. Following persons are not allowed to opt for the composition scheme : (a) a casual taxable person or a non-resident taxable person; (b) suppliers whose aggregate turnover in the preceding financial year crossed ` 75 lakhs; (c) supplier who has purchased any good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T ITC-01 on the common portal. Q7. How will the aggregate turnover be computed for the purpose of composition? Ans. Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as Central, State/Union Territory and Integrated taxes and cess. Q8. Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies? Ans. No. A taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies. When he switches over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed (refer Q 6 above). Q9. Can a registered person, who purchases goods from a taxable person paying tax under the composition scheme, avail credit of tax paid on purchases made from the composition dealer? Ans. No. As the composition dealer cannot collect tax paid by him on outward supplies from his customers, the registered person making pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons, held by him on the day preceding the date from which he opts to pay tax under the composition scheme, electronically, in FORM GST CMP-03, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, within a period of sixty days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf. Q17. Can a person making application for fresh registration under GST opt for composition levy at the time of making application for registration? Ans. Yes. Such persons can give the option to pay tax under the composition scheme in Part B of FORM GST REG-01 . This will be considered as an intimation to pay tax under the composition scheme. Q18. Can the option to pay tax under composition levy be exercised at any time of the year? Ans. No. The option is required to be given electronically in FORM GST CMP-02, prior to the commencement of the relevant financial year. Q19. Can a person who has already obtained registration, opt for payment under composition levy? If so, how? Ans. Yes. Such persons need to give intimation e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve date of composition levy Persons who have been granted provisional registration and who opt for composition levy (Intimation under Rule 3(1)). The appointed date is 22nd June, 2017. Persons opting for composition levy at the time of making application for new registration in the same registration application itself (Intimation under Rule 3(2)). Effective date of registration; Intimation shall be considered only after the grant of registration and his option to pay tax under Section 10 shall be effective from the effective date of registration. Persons opting for composition after obtaining registration (Intimation under Rule 3(3)). The beginning of the financial year. Q23. What are the other conditions and restrictions subject to which a person is allowed to avail of composition scheme? Ans. The person exercising the option to pay tax under Section 10 shall comply with the following other conditions (in addition to what is stated in answer to Q4 above), namely : - (a) he shall mention the words composition taxable person, not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock) by him on the date on which the option is denied as per order in FORM GST CMP-07, within a period of thirty days from the order. Q28. Will withdrawal intimation in any one place be applicable to all places of business? Ans. Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union Territory, shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number. Q29. Can supplier of services opt for composition levy? Ans. No, the only exception being supplier of restaurant services. Q30. What are the penal consequences if a person opts for the composition scheme in violation of the conditions? Ans. If a taxable person has paid tax under the composition scheme though he was not eligible for the scheme then the person would be liable to penalty and the provisions of Section 73 or 74 shall be applicable for determination of tax and penalty. Q31. Can a person paying tax under composition scheme make supplies of goods to SEZ? Ans. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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