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Composition Levy - Amendments needed in upcoming budget

January 31, 2018 1535 Views
Pradeep Jain
Neetu Sukhwani


1. Although the composition levy of GST regime is not a lucrative scheme for small assessees due to number of restrictions placed on it, yet the government has put earnest efforts to make it attractive by making amendments from time-to-time. The major hindrance for availing of the said scheme is the prohibition as regards inter-State supplies of goods. Nonetheless, the government in its 23rd GST Council Meeting held on 10.11.2017 had recommended certain changes in the composition scheme.

Recommendation of the GST Council

2. One of the recommendations was for uniform tax rate of 1% for manufacturers and traders. Furthermore, it was also recommended that in case of tax payment by traders under composition levy, taxable turnover shall be considered. These changes were notified vide Notification No. 01/2018-Central Tax dated 01.01.2018. {The amendment to the rate has been made in the notifications pertaining to Central Tax Section instead of Central Tax (Rate) Section}. However, other recommendation regarding allowing supply of services to the extent of Rs. 5,00,000 per annum is pending till date. The eligibility criteria mentioned for option of composition levy under section 10(2)(a) of the CGST Act, 2017 states that the registered person is not engaged in supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II. The proposal for allowing supply of services to the extent of Rs. 5,00,000/- per annum was made in the GST Council meeting. However, the recommendation of the GST Council has not turned into reality as it requires amendment to the CGST/SGST Act. It is hoped that the said change would be brought in the upcoming budget.

Concluding Remarks

3. Although the CGST Rate of 0.5% for manufacturers has been confirmed vide notification no. 01/2018-Central Tax dated 01.01.2018, but no amendment has been made to the CGST Rules, 2017 (as amended upto 30.12.2017) and appearing on the CBEC website. It is hoped that the rate of tax mentioned for composition taxpayers would be amended in the CGST Rules, 2017 too in the upcoming budget. Apart from the above expected changes, suitable amendments are also required to be made to the CGST/SGST Acts regarding increasing the annual turnover for eligibility for composition scheme from the present limit of Rs. One Crore to Rs. Two Crores which should be considered in the upcoming budget.


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