A registered tax payer, whose aggregate annual turnover
does not exceed Rs 1.5 Crores or Rs. 1 Crore (for
specific states) in the preceding financial year shall
pay at a rate in lieu of central tax rate and State tax
rate of not more than 2.5% CGST and 2.5% SGST
respectively for restaurant sector and 0.5% CGST and
0.5% SGST for manufacturers and other suppliers.
Composition Scheme will be a growth driver for small
taxpayers who are carrying out intrastate transaction
and does not involve into import-export of goods.
Recent Amendments: As per notification dated
01.01.2018, turnover in case of traders has been defined
as ‘Turnover of taxable supplies of goods only’.
Operation of Transitional Provisions on GST
Composition Scheme: To understand this firstly we
have to understand the transition process under GST. The
transition provision comes into effect only and only
because of the Input tax credit which we have left over
and carried in our tax returns filed by us in the last
return filed by us for the month of June i.e., before
the date of July 1 (the day of implementation of GST).
One could have filed his return for the month of June
with Cenvat credit balances (in case of manufacturer) or
a tax payer could have also filed his VAT return with
Input Tax Credits lying for the stocks purchased in the
month of June and remaining unsold or there may be even
stock lying in the taxpayers place of business against
which taxes have been paid, returns have been filed but
all these under earlier tax regime.
But now since GST is totally different tax structure it
has to carry the tax payers data right from the
registration process till carrying of Credits from the
returns filed under previous tax regime or from the
documents that justifies the taxes paid on the closing
stock by the tax payers which are intended to be used
for sale or furtherance of business even after
implementation of GST tax law. Let us understand this
arrangement in a better way. Now let us analyze
situation wise status of Input Tax Credit for a
composition tax payer when he makes a switch to and fro
from Composition tax scheme to Regular scheme in GST and
vice versa.
Situation |
Manner of handling of Credits in the
transition process after satisfying the
following conditions |
Switching from Normal Tax payer to
Composition scheme. The following situations
may arise.
The goods
or services or both supplied by him
become wholly exempt, on switch over
date or where the taxpayer has availed
input tax credit, opts to pay tax under
Composition scheme
|
Then on the date of Switching
from normal scheme to composition scheme,
taxpayer shall be liable to pay an amount
equal to the credit of input tax by way of
debiting in the electronic credit /cash
ledger in respect of inputs held in stock on
the day immediately preceding the date of
such switch over. The balance of input tax
credit after payment of such amount, if any
lying in the credit ledger shall lapse. |
Switching
from Composition Scheme to Normal Tax payer |
Switching from composition scheme under
current regime to normal tax payer under GST
will attract transition provision and will
be allowed credit of duties held in stocks
as inputs or
credit of value added Tax in respect of
inputs and inputs contained in semi-finished
or finished goods on the appointed date
subject to the following conditions:
Such inputs or goods are used or to be used
in the making of taxable supplies
-
Not being
a composite scheme holder
-
Being eligible to claim credit of taxes
-
The inputs were not such that credit was
not admissible under the earlier law due
to being mentioned in any schedule or
otherwise
-
Being in possession of invoice or
document evidencing payment of duties
under earlier laws w.r.t. inputs held in
stock and semi-finished or finished
goods
-
Such invoices and/ or documents were
issued maximum twelve months before the
appointed date.
|
Transiting from erstwhile tax regime to
GST
Tax Regime |
Following are the conditions which must be
addressed by the taxpayer to avail credit on
input at the time of transition from
composition scheme to the normal scheme:
-
Such
inputs or goods are intended to be used
for making taxable supplies under GST
Law.
-
Taxpayer was eligible for CENVAT Credit
on such goods under the previous regime,
however, couldn’t claim it being under
composition scheme.
-
Such goods are eligible for input tax
credit under GST regime.
-
The taxpayer has legal evidence of input
tax paid on such goods.
-
Such invoices were issued within a
period of 12 months from GST applicable
date.
|
The taxpayers should also note that under GST most
of the compliances have to be done online. The
process of deduction, payment, and refund of
indirect taxes under GST would be carried out
electronically. Every business should have a fully
computerized office for ease of compliance under
GST. And the gst software, Tally.ERP 9 could be your
IT Partner which offers simplicity in design and
usage of software and also processes your returns
and file returns from its software tool by enabling
you to convert the GST Return data into JSON
supported file format and thereby making filing of
returns an easier job to handle. For composition tax
payers Tally.ERP 9 Release 6.4 has provisions for
matching of input tax credits with the auto
populated inward supplies return (Form GSTR 4A) and
thus enable reconciliation process an easier task.
Source::: The Pioneer,
dated 01/03/2018.