Composition Levy under GST by CS Shikha Jain

India being an Independent nation is only a stage behind from receiving this assessment structure and that is probably going to happen most recent by June, 2017 so in the wake of embracing this GST (Goods and Service Tax) it turns into the greatest expense change in India. It makes one National Tax supplant a huge number of complex ones that contrast from state to state.

  • What does Composition Levy mean under GST?

The “Composition Levy ” is adopted so that tax payers should remain distressed & on the contrary small dealers should face a hassle free system for compliance procedures GST accompanies the idea of Composition Levy. In the event that we examined this plan under VAT, so clearly it's not another plan under VAT. Under the VAT law, Dealers are not required to maintain proper books of accounts, or records of material transacted.

To help small business tackle the bothers of gathering GST, claiming input tax credit etc the model GST law has proposed a simpler levy known as Composition Levy.

Additionally, this arrangement likewise relevant under GST . Those people who are covered to pay GST are exempted from maintaining books of records.

Small dealers & businesses could adopt the composition scheme which is known as Composition Levy. GST Law will provide the option to opt the benefit of the Composition Levy to small businesses houses. This Scheme is a feature of Indirect Tax laws where the assesses pay the tax on value addition by maintaining detail of Input & outputs.  

 The Main objective of the Composition Scheme does not give the weight to the small dealers from the provision of record keeping.  This Scheme will adopted by all the registered taxable persons having the same PAN. The Registered Person under this scheme is required to pay the tax on Quarterly basis & with this registered person also file quarterly return in form GSTR-4.

  • Who is Eligible to adopt Composition Levy under GST?

The composition scheme under GST will be applicable to those people whose total should not surpass 50 lakh in a financial year.

In other words, Any Registered taxable person whose Aggregate Turnover of such person shall not exceed 50 Lakhs in a financial year.

Aggregate Turnover means the aggregate value of all taxable & non- taxable supplies & it is to be calculated for all taxable persons, on all India Basis, having the same PAN.

  • Who are Not eligible to adopt Composition Levy under GST?

Any taxable person who is engaged in the supply of services are not eligible to adopt composition levy under GST.

Composition Levy Scheme in the GST Regime

  • This scheme is an optional scheme. Registered Taxpayer has the option to opt or not.
  • Only the Registered Taxable person can opt or not to opt the scheme.
  • Under this Scheme, Person should neither be a casual taxable person nor a non-resident taxable person.
  • Permission shall be required of the Central or State Government officer for adopting the scheme.
  • Gross Turnover of the registered taxpayer shall not exceed 50 Lakhs in a financial year.
  • Gross Turnover is computed for all Taxable persons, on all India Basis, having the same PAN.
  • A Taxable person who adopted the Composition Scheme is not entitled to any Input Tax Credit.
  • The option opt by the registered taxpayer to pay the tax under the Composition Scheme is remain valid as long as he satisfies all the conditions.
  • The Scheme is not available if a person is paying the tax under reverse charge Here Reverse Charge means the liability to pay tax on the recipient of the supply of goods & services.

Registered Person has an option to withdraw from Composition Scheme by filling the application.

The Option which is exercised by the Registered Taxpayer shall lapse with the effect from the day on which his aggregate turnover during a financial year exceeds 50 Lakhs.       


CS Shikha Jain


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