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GST: Govt. issues Advisory on Opting-in for Composition Scheme for Financial year 2021-22

GST: Govt. issues Advisory on Opting-in for Composition Scheme for Financial year 2021-22

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The Goods and Services Tax Network (GSTN) has issued Advisory on Opting-in for Composition Scheme for Financial year 2021-22.

How to opt-in for Composition Scheme:
1. The eligible registered taxpayers, who want to opt-in for composition scheme for the FY 2021-22, need to file FORM GST CMP-02 application, on or before 31st March, 2021, post login on GST portal. The taxpayers may navigate as follows:

Log-in>Services > Registration > Application to opt for Composition Levy>Filing form GST CMP-02>File application under DSC/EVC

1. Once Form GST CMP-02 application is filed, the composition scheme will be available to the taxpayer, w.e.f. 1st April 2021.
2. The taxpayers already opted in for composition scheme earlier are not required to opt in again for FY 2021-2022.
3. Taxpayers who were regular taxpayers in previous FY, but are opting-in for composition scheme for 2021-22, must file Form GST ITC-03 for reversal of ITC on stocks of inputs, semi-finished goods and finished goods available with them, within 60 days from the effective date of opting in.

Who is eligible for opting-in for Composition Scheme:– Following Normal taxpayers, who don’t want to avail ITC facility, may opt for this scheme:

1. having aggregate turnover (at PAN level) upto Rs. 1.5 Crore in the previous FY.
2. having aggregate turnover (at PAN level) upto Rs. 75 lakh in the previous FY and who are registered in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura & Uttarakhand.
3. supplying services and/or mixed supplies having aggregate turnover of previous FY upto Rs. 50 lakhs.

Who is not eligible for opting in composition scheme:
1. Suppliers of the goods/services who are not liable to pay tax under GST
2. Inter-State outward suppliers of goods/services
3. Taxpayers supplying goods through e-commerce operators who are required to collect tax under sec 52
4. The manufacturers of notified goods like Ice cream and other edible ice, whether or not containing cocoa, tobacco and manufactured tobacco substitutes, Pan Masala & Aerated water

Source: TaxScan.

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GST Council
Major Decisions taken by the GST Council in its 32nd Meeting

Major Decisions taken by the GST Council in its 32nd Meeting

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The GST Council in its 32nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley in New Delhi took the following major decisions to give relief to MSME (including Small Traders) among others –

1.   Increase in Turnover Limit for the existing Composition Scheme: The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to Rs 1.5 crore. Special category States would decide, within one week, about the Composition Limit in their respective States.

1.1    Compliance Simplification: The compliance under Composition Scheme shall be simplified as now they would need to file one Annual Return but Payment of Taxes would remain Quarterly (along with a simple declaration).

2.    Higher Exemption Threshold Limit for Supplier of Goods: There would be two Threshold Limits for exemption from Registration and Payment of GST for the suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have an option to decide about one of the limits within a weeks’ time. The Threshold for Registration for Service Providers would continue to be Rs 20 lakh and in case of Special Category States at Rs 10 lakhs.

3.   Composition   Scheme for Services: A Composition Scheme shall be made available for Suppliers of Services (or Mixed Suppliers) with a Tax Rate of 6% (3% CGST +3% SGST) having an Annual Turnover in the preceding Financial Year up to Rs 50 lakhs.

3.1  The said Scheme Shall be applicable to both Service Providers as well as Suppliers of Goods and Services, who are not eligible for the presently available Composition Scheme for Goods.

3.2  They would be liable to file one Annual Return with Quarterly Payment of Taxes (along with a Simple Declaration).

4.     Effective date: The decisions at Sl. No. 1 to 3 above shall be made operational from the 1st of April, 2019.

5.    Free Accounting and Billing Software shall be provided to Small Taxpayers by GSTN.

6.   Matters referred to Group of Ministers:

i.   A seven Member Group of Ministers shall be constituted to examine the proposal of giving a Composition Scheme to Boost the Residential Segment of the Real Estate Sector.

ii.    A Group of Ministers shall be constituted to examine the GST Rate Structure on Lotteries.

7.  Revenue Mobilization for Natural Calamities: GST Council approved Levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not exceeding 1% for a period not exceeding 2 years.

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Source: Narendra Modi
GST E-way Bill and Composition Scheme To Be Main Agenda in Next Meeting

GST E-way Bill and Composition Scheme To Be Main Agenda in Next Meeting

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GST E-way Bill and Composition Scheme To Be Main Agenda in Next Meeting

The  successful implementation of GST E-way bill and the lower than expected Goods and Services Tax under the composite scheme is set to be the main agenda for the GST Council meeting scheduled on Saturday.“Two things will be on the top of agenda in the next GST Council meet on Saturday. First is the timely implementation of the E-way bill and secondly the falling Goods & Services Tax collection under the composite scheme. Both issues had already been flagged by the revenue secretary,” a senior finance ministry official said.

The government had decided to start the inter-state movement of goods worth more than Rs 50,000 through e-way bill mechanism with the implementation of GST. However, the E-way bill, which was to be launched on February 1, was postponed as the IT network crashed. Consequently, the system continued on a trial mode  with full implementation deferred until April 1.

Also read: What is an e-way bill and why is it important?

“Now that there is less than a month for implementation, the GST Council wants to ensure that this time there is no technical glitch. The finance secretary had already sought a report on the reasons for technical failure and a progess report. The report will be discussed in the meet,” the official said.

The second issue on the agenda is falling GST collections under the composite scheme. The collection of GST slipped marginally to Rs 86,318 crore in January, from Rs 86,703 crore in December, less than expected by the government. As many as 7.28 crore GST returns have been filed so far on the GSTN portal since the implementation of the goods and services tax. For the month of January, 56.72 lakh returns were filed.

Also read: 26th GST Council meeting on March 10; focus on simplification of return filing process

However, 1.23 lakh companies registered under the scheme have opted out and become regular taxpayers.
“The response has not been as expected. The government expected better revenue. These things will be taken up in the meeting,” the official said, adding that there will be no major overhaul in the tax slabs.
Also, while the Council will discuss the simplification of the return filing process, GSTR-3B will continue for some time.The Goods &  Services Tax Council, in its meeting in November, had extended GSTR-3B filing till March end.

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Source: New Indian Express
Lukewarm response prompts govt to reopen registrations for GST composition scheme

Lukewarm response prompts govt to reopen registrations for GST composition scheme

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GST composition scheme

The government has decided to re-open registrations for small businesses under the composition scheme, after the plan received lukewarm response, with only 10 percent of total taxpayers under GST opting for it.

“We (GST Council) have decided that those who have migrated as well as new (taxpayers) can up to September 30 migrate further to the composition scheme,” Finance Minister Arun Jaitley had said after the GST Council meeting on Saturday.

Composition scheme is an alternate method of taxation, which allows small businesses with annual turnover up to Rs 75 lakhs, to pay tax at a concessional rate, as well as reduce the compliance cost. The revenue threshold is Rs 50 lakhs for dealers across nine states including Arunachal Pradesh, Nagaland and Tripura among others. The enrollment into the plan is optional.

The number of dealers opting for the composition scheme under GST was 9.38 lakhs as of August 16, which marked the deadline towards signing up for the scheme. The previous cutoff date for the scheme was Jul 21, which was extended by nearly four weeks.

As of July 30, dealers opting for the scheme were 5.12 lakh, which almost doubled to 9.38 lakhs in two weeks, a sharp contrast from mere 1 lakh registrations as on July 21. The numbers indicate a pickup in response after a shift in the deadline.

Re-opening registration for the composition scheme also indicates the government’s plan to bring three crore tax payers under the GST net. Currently, more than 72.5 lakh excise, service tax and VAT payers have migrated to GST, which was implemented from July 1.

Around 21 lakh new registrations fall under the ambit of the new indirect tax system, taking the total registrations to over 93 lakh.

A composition dealer can pay tax at a prescribed percentage of the business’ turnover every quarter, instead of paying tax at normal rate. Under the scheme, traders, manufacturers and restaurants can pay tax at 1, 2 and 5 percent, respectively.


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Compliance burden for taxpayer would reduce as they will have to file returns only once in a quarter as against monthly returns that needs to be filed by other normal taxpayers. However, dealers cannot avail input tax credit, unlike a normal taxpayer.

According to officials in the finance ministry, the response of the dealers towards composition scheme was muted as people were unaware of the benefits of opting for the scheme.

The main reason for a poor response for the scheme, officials say is that exports are considered inter-state trade, which is not covered under composition scheme.

Another reason is dealers opting for the flat rate scheme will have to pay tax for certain items exempted under GST, which may not be favourable for them.


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Source :  Money Control
GST: Composition scheme picks up pace after deadline leeway

GST: Composition scheme picks up pace after deadline leeway

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GST: compostion scheme

About a million taxpayers have opted for a scheme that will benefit small businesses in the Goods and Services Tax (GST) regime by allowing easier compliance and a flat rate of tax.

After a muted response initially, interest in the composition scheme has increased. As of August 16, the last date to apply for the scheme, 938,165 entities had registered, against about 100,000 as of July 21, the earlier deadline. In other words, about 11 per cent of GST taxpayers have opted for the composition scheme.

Those with an annual turnover of up to Rs 75 lakh are eligible to apply for the scheme, which allows them to pay one per cent tax if they are traders, two per cent if they are manufacturers and five per cent if they are in the restaurant business.

“Response picked up after we extended the deadline as it gave time for businesses to plan better and take a decision,” said a government official. “For businesses that failed to register under the composition scheme now, an opportunity will arise only next year. It is difficult to compare the data as a scheme of this scale and uniformity was not available under the earlier tax regime.”

The composition scheme under the value-added tax regime varied from state to state. The eligibility condition for the composition scheme in June was raised to up to Rs 75 lakh annual turnover by the GST Council, from Rs 50 lakh earlier. A dealer registered under the composition scheme is not required to maintain detailed records, which a normal taxpayer will have to keep.

Response to the scheme could have been better had the conditions not been this stringent, experts said.

Those dealing only in goods can opt for the composition scheme and service providers, barring restaurants, were keep out. Besides, a composition dealer is not allowed to avail input tax credit. Such a dealer cannot issue a tax invoice as well. Thereby, someone buying from a composition dealer will not be able to claim input tax on such goods, limiting the popularity of the scheme. In addition, reverse charge mechanism will not be covered under the scheme.


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GST Composition scheme

Finance Minister Arun Jaitley and Revenue Secretary Hasmukh Adhia have been claiming that the composition scheme would benefit small businesses, but these entities do not seem to be convinced. But, a composition dealer only needs to furnish one return, GSTR-4, on a quarterly basis and an annual return in form GSTR-9A, against three forms on a monthly basis by a normal taxpayer.

Pratik Jain of PwC India said it was difficult to compare and assess the response to the scheme. It would have been better had it also been extended to small service providers. “Besides retailers, it is mostly restaurants that appear to have opted for the scheme as they do not have much of input tax credit to avail,” he said.

The composition scheme is not available on inter-state supply of goods. M S Mani of Deloitte said a person supplying to another state needed time to strike a supply deal with a normal taxpayer in his own state who can supply to another state.


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Source :  Business Standard