Small taxable persons – Exemptions and composition scheme :
♦ Small taxable persons having turnover upto Rs 20 lakhs are exempt from GST [limit Rs 10 lakhs for North Eastern States, Himachal Pradesh and Uttarakhand and Jammu and Kashmir]
♦ Small taxable persons supplying goods upto Rs 50 lakhs per annum are eligible for simplified scheme [composition scheme]
♦ Composition scheme is available to small taxable persons if all their purchases are from registered persons within the State. Otherwise, they have to pay GST on purchases. This condition is practically impossible to be complied with.
♦ The taxable person opting for composition scheme will have to pay a fixed percentage of gross turnover as tax.
♦ In case of payment of tax under composition scheme, the taxable person should issue ‘Bill of Supply’ instead of Tax Invoice with details specified in rule 4.
♦ They have to pay CGST as follows – (a) 1% of turnover in State or Union territory in case of a manufacturer (b) 2.5% of turnover in State or Union territory in case of persons engaged in making supplies referred to in para 6(b) of Schedule II of CGST Act [restaurant service] (c) 0.5% of turnover in State or Union Territory in case of other suppliers [i.e. traders]
♦ There will be equal SGST/UTGST. Thus, total tax payable will be double the aforesaid rates.
♦ The scheme is optional. The option lapses on the day his aggregate turnover exceeds the specified limit – section 10(3) of CGST Act.
♦ The option has to be exercised every year by filing e-declaration before Financial year. It is not automatic.
♦ He has to submit details of stock with him as on 1-7-2017.
♦ If the scheme is misused, the option can be withdrawn by ‘proper officer’.
♦ All registered taxable persons having same PAN number should opt for the composition scheme.
♦ Taxable persons whose all supplies of goods and services are within the State only will be eligible for the simplified scheme.
♦ Taxable persons who opt for composition scheme will not be allowed to charge GST in their invoice. They cannot show GST in their invoice. They are not entitled to any input tax credit. [section 10(4) of CGST Act].