|Category||Title||URL||Heading||Overview||Content||Meta Title||Meta Description||Meta Keywords||Action|
|GST||Composition Scheme||gst-composition-scheme||Composition scheme under gst||
A composition scheme is an optional scheme of levy of tax available for small taxpayers in the Goods and Services Tax (GST) regime. Under this scheme, tax is levied at a reduced rate with fewer compliances. Composition dealer, the person who opted for a composition scheme, needs to pay GST at a prescribed percentage of his turnover every quarter.
GST composition scheme turnover limit
The composition scheme turnover limit in GST is 1.50 crores that mean taxpayers whose turnover is less than this limit may apply for the composition scheme. In the case of the North-Eastern States and Himachal Pradesh, this limit is Rs 75 lakhs. Additionally, as per the amended CGST act, registered composition dealers can also provide services to the extent of Rs 5 lakhs.
List of persons who cannot opt for composition scheme in GST
(a) Suppliers whose aggregate turnover in the preceding financial year exceeds Rs 1.5 crore
(b) Inter-state supplier of goods
(c) Supplier of services other than restaurant services
(d) Any person engaged in making non-taxable supply
(e) Casual Taxable Person or Non-Resident Taxable person
(f) Manufacturer of pan masala, tobacco and, manufactured tobacco substitutes
(g) Manufacturer of ice cream and other edible ice
(h) Taxpayer engaged in any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52
Conditions for registering under GST composition scheme
(a) Input tax credit cannot be claimed
(b) Inter-state supply of goods is restricted*
(c) The word “Composition taxable person” must be mentioned on every bill of supply issued by the composition dealer
(d) The word” Composition taxable person” must be mentioned on every notice or signboard displayed at the place of business
(e) Tax paid cannot be collected from customers
(f) A taxable invoice cannot be issued. Bill of supply will be issued instead of tax invoice.
(g) Exempted/non-taxable goods cannot be supplied
*Note, composition dealers can purchase goods or services from other states but the supply of goods or services outside the state is restricted.
How to register for the composition scheme?
The option to pay GST under composition levy can be exercised prior to the commencement of the relevant financial year. Following steps need to follow to opt for a composition scheme-
Step 1: Visit the login page of GST official Website
Step 2: Enter login credentials
Step 3: After login, navigate to the “Services” > Registration > “Application to opt for Composition levy”
Step 4: On this screen,
Step 5: A Warning pop-up will be displayed on the screen. Click the “PROCEED” button. On the successful filing of an application for opting composition scheme, a success message will appear on the window and you will receive acknowledgment on your registered mobile number or email.
Format of Bill of Supply in composition scheme
Composition dealers cannot issue a tax invoice as they are not permitted to collect tax from customers. Dealer has to issue Bill of Supply specifying the particulars as given below-
(a) Name, address, and GST number of the supplier
(b) Bill of Supply number (a consecutive serial number not exceeding 16 characters)
(c) Issue date of the bill
(d) Name, address, and GST number of the recipient if the recipient is registered in GST law
(e) Description, Value (after adjusting discounts, if any), and HSN code of goods
(f) Signature or digital signature of composition dealer
GST rates specified for composition dealer
GST composition forms
Below is the complete list of GST forms involved in the composition scheme.
The last date to opt into the composition scheme for the FY 2020-21 in form CMP-02 has been extended up to 30th June 2020.
GST returns for composition dealer
28th May 2021
(i) GSTR-4 for FY 2020-21 can be filed up to 31st July 2021.
(ii) The maximum late fee for GSTR-4 is restricted to Rs.500 per return for nil filing and Rs. 2000 for other than nil filing.
1st May 2021
(i) The due date to file GSTR-4 for FY 2020-21 extended to 31st May 2021.
(ii) Relaxation is given in the interest charges for late filing of Form CMP-08 for January-March 2021. No interest for filing on or before 8th May, interest reduced to 9% between 9th May and 23rd May but charged at 18% thereafter.
15th February 2021
The due date for filing GSTR-4 return for FY 2020-21 is 30th April 2021.
31st August 2020
The last date for filing Form GSTR-4 for the FY 2019-20 from 31st August 2020 to 31st October 2020.
6th August 2020
Now, GSTR-4 can file using an excel-based offline tool on the GST portal.
21st July 2020
The facility to file GSTR-4 is now available on the GST portal. 13th July 2020 The due date to file GSTR-4 has been extended to 31st August.
Difference between regular scheme and composition scheme
|GST Composition Scheme | Everything about Composition Scheme||The composition scheme turnover limit in GST is 1.50 crores that mean taxpayers whose turnover is less than this limit may apply for the composition levy under GST||GST composition scheme, Composition scheme under GST, Composition dealer|
|GST||GST Registration||gst-registration||GST Registration Online - A start to finish guide||
What is GST registration?
A unique GST identification number is issued to the taxpayer after filing an online application on the Common portal. Any person having a GST number means he is registered under Goods & Service Tax. Registered taxpayers are required to collect tax from customers and deposit it to the Government.
Registrants will enjoy the following benefits-
Types of GST registration
Any individual or business who is not required by law to get registered under GST may apply for registration on a voluntary basis. In that case, he has to follow all GST compliances as if he was liable for registration. Further, as per section 29 of the CGST Act, voluntary registration may be canceled if the business has not been commenced within six months from the date of registration.
Every person is legally bound to register in the GST regime if,-
Suo moto registration
As per rule 26 of CGST rules, a GST officer may register the person on a temporary basis if during any proceedings he finds that such person liable to registration under the Act and has failed to apply for same Any person to whom temporary GST registration is granted shall apply for registration within a period of ninety days from the date of the temporary registration.
Registration under composition levy
Small taxpayers whose turnover is less than Rs 1.50 crores have an option to register under the GST composition scheme. In this scheme, GST levied at the reduced rates and also fewer GST compliances need to follow.
Who should apply for GST registration?
(1) Any person who is engaged in the exclusive supply of goods, and his aggregate turnover of such supplies exceeds Rs 40 lakh in a financial year
(2) Any person who is engaged in the supply of services, and his aggregate turnover of services exceeds Rs 20 lakh in a financial year.
(3) Inter-state state supplier of goods or services
(4) Person liable to pay tax under reverse charge mechanism
(5) Casual taxable person
(6) Non-Resident taxable person
(7) E-commerce operator
(8) A person who requires to deduct tax under section 51 of CGST act, 2017
(9) Input service distributor
(10) Any person who is engaged in the supply of goods or services on the behalf of another taxable person
(11) Every person supplying OIDAR services from a place outside India to an unregistered person in India
(12) Persons notified by the government
Who is not required to register under GST?
Any person engaged in the following supplies exempted from registration under GST-
(a) Supply of exempted or non-taxable goods/services
(c) Inter-state sale of services and aggregate turnover is less than Rs 20 lakhs.
(d) Supply covered under the reverse charge mechanism
Documents for online GST registration
Following documents are required to be uploaded on GST official website for registration-
(1) PAN card of the applicant
(2) Aadhaar card of the applicant
(3) Cancel cheque copy or bank A/c statement
(4) Business address proof i.e. rent agreement or property tax receipt/electricity bill
(5) MOA, AOA, and certificate of incorporation in case of a company
(6) Partnership deed in case of a firm
GST provisions applicable to registration
GST registration validity
There are no time restrictions given in law for the validity of the GST number. Registration is valid for a lifetime if It has not canceled by the tax officer nor surrendered by the taxpayer. However, In the case of a casual taxpayer or non-resident taxable person, the validity of registration is limited for a period of 90 days or the period mentioned in the registration application.
Steps to track GST application status
After submission of application for registration on GST portal, the status of an application can be tracked by following steps given below -
Step 1: Visit the GST portal
Step 2: Click on the “Service” tab
Step 3: Select the “Registration” tab from the dropdown menu
Step 4: Click on “Track Application Status”
Step 5: Enter ARN and click on the search button
Step 6: Status of application will be displayed
As per Section 26, the grant of registration or the Unique Identity Number (UIN) under the SGST Act or the UTGST Act shall be deemed to be a grant of registration/UIN under the CGST Act subject to the condition that the application for registration/UIN has not been rejected.
Amendment of registration
As per section 28, every registered taxpayer shall inform the proper officer of any changes in the GST certificate. The requirement for amendments in registration may arise due to several factors such as a change in address, change in contact number, change in business details, and so on. Application for amendment of registration can be categorized into two types:
Revocation of cancellation of registration
Section 30 gives an option to taxpayer to restore his registration by making the application within 30 days from the date of service of the cancellation order. Revocation is not allowed for UIN holders, GST practitioners or, GST cancelled on taxpayer request. It is important to note that restoration application can be filed only after filing returns along with interest and penalties. If registration has been cancelled due to the non-filing of GST returns, Proper officer may reject the application only after giving an opportunity of being heard taxpayer.
|GST Registration Online | Everything about GST Registration Process||Every supplier of goods is required to take GST registration online if his aggregate turnover exceeds 40 lakh. Online GST registration limit for services is Rs 20 lakhs||GST registration, GST registration online, GST registration process, GST registration fees|
|GST||Input Tax Credit||input-tax-credit||Input Tax Credit under GST||
Input tax credit (ITC) means taxes paid on purchases of goods or services can be claimed at the time of payment of taxes on output. For example, Mr. Juneja is running a garments shop, and in the month of April, he paid a tax of Rs. 1000 on purchases and collected tax of Rs 1500 from customers. In the given situation, the Tax of Rs 1000 paid by Mr. Juneja is ITC and can be reduced from GST dues. Accordingly, he is liable to deposit Rs 500 (1500-1000) to the government.
Similarly, In Goods and Services tax, a registered taxpayer can claim the GST paid on purchases against GST liability on outward supplies. Undoubtedly, ITC is one of the major reliefs provided to the taxpayers in the GST regime. But the fact also cannot be denied that a lot of amendments in ITC provisions have created complications not only for businesses but for CA professionals also. Let’s proceed towards the solution you are looking for.
Conditions to claim ITC
As per section16 of the CGST Act, ITC shall be available to a taxable person only if the following conditions are satisfied:
Supply must not be covered under blocked credit.
Payment for the respective supply must be made within 180 days.
Documents required availing ITC in GST
Taxpayers have to submit the following documents on the common portal to claim GST credit -
The input tax credit shall not be available in respect of the following supplies-
Order of utilization of input tax credit in GST regime
Once all conditions of claiming ITC are satisfied it would be credited in the electronic credit ledger and can be used to pay GST dues. As per new rules, the balance available in the credit ledger shall be used in the following manner-·
When a refund of the accumulated input tax credit can be claimed?
A refund of ITC is available in the GST regime if ITC is accumulated on account of the following supplies.
(1) Exports without payment of IGST
(2) Inverted duty structure
(3) Supplies to SEZ units/SEZ developers without payment of IGST
Reversal of input tax credit
Reversal of ITC means credit availed by the taxpayer will be added to output liability in the electronic cash ledger. Also, the taxpayer shall liable to pay interest on the reversal amount from the date of availing of input credit to the date of payment. Following are the cases when credit needs to be reversed;
(1) Payment has not been made to the supplier within 180 days from the invoice date. In the case of part payment of invoice, ITC will be reversed on a proportionate basis.
(2) Input used for personal purposes or exempted supplies. In that case, the amount of reversal will be calculated on a proportionate basis.
(3) Taxpayer switches to a composition scheme. In that case, the electronic credit ledger will be debited equal to the ITC balance on the day immediately preceding the date on which the taxpayer liable to pay as a composition dealer.
(4) ITC availed on supplies that are covered under blocked credit.
Input tax credit forms
GST forms related to ITC has summed up in one place by way of the below table-
Treatment of input tax credit in different situations
Goods received in installments
One of the preconditions to claim credit in GST is that goods or services must be received. Accordingly, if goods are received in installments, credit would be available only on receipt of the last installment.
For example, in the month of October, TaxGyata made a payment of Rs 500,000 (Including GST of Rs 90,000) for raw material. The vendor delivered material to TaxGyata in three lots - 1st lot in October, 2nd lot in November, and the final lot in the month of December. In the given situation, TaxGyata can take credit of Rs 90,000 in December on receipt of the final lot.
Goods sent for Job Work
As per section 19 of CGST Act, the principal manufacturer eligible to take credit on goods sent out for further processing to a job worker, with the condition that goods sent on job work must be received back by the manufacturer within 1 year (or 3 years in case of capital goods). It is relevant to note that credit is available even goods sent directly to the place of the job worker without bringing back it to the main manufacturer premises.
iii. Composition scheme
Under the composition scheme, a taxpayer is liable to pay GST at a lower fixed rate, and therefore the benefit of ITC would not available. Also, the composition dealer is not permitted to take credit for tax paid in the reverse charge mechanism. If a composition dealer ceases to pay tax under the composition scheme and liable to pay as a regular taxpayer then he can take credit in respect of the following-
a) Input held in stock;
b) Input contained in semi-finished goods and finished held in stock;
c) Capital goods.
Integrated tax or compensation cess paid on import transactions can be used for payment of GST dues. However, basic custom duty paid by the importer would not be admissible as ITC. And, to validate ITC in imports,
a) GST number must be declared in the Bill of Entry
b) GST common portal will be inter-connected with the customs EDI system
Cancellation of registration
GST cancellation can be done by the tax officer on his own motion or at the request of a taxpayer. Once GST canceled, ITC would not be available from that date. Not will only that, a refund of surplus credit will also not permissible.
Input tax credit provisions in different business sectors
Works contract service
GST credit shall be available to the taxpayer if work contract service for;
Good Transportation Agency (GTA)
GTA is permitted to claim the credit in GST only if he is liable to pay tax. Further, GTA has the option to pay GST @ 5% without taking the benefit of ITC. But this option must be chosen by GTA at the beginning of the year.
For example, GTA transports goods to an unregistered dealer. Freight- Rs 35,000, Tax paid by GTA on inward supplies – Rs 2000.
Option 1: GTA opted to pay GST @ 12%. Tax liability of GTA will be (35000*12%) 4,200 –Rs 2000 = Rs. 2200Option 2: GTA opted to pay GST @ 5%. Tax liability of GTA will be 35000^5% = Rs 1,750. No credit would be available in this option.
Hotel & Restaurants
Restaurants are not allowed to claim credit in GST as restaurants are liable to pay GST at a lower rate of 5%. However, this credit restriction will not be applicable to restaurants inside hotels having a room tariff of Rs 7,500 or more. For example,
Hotel accommodation bill
GST paid on a bill of hotel accommodation can be claimed while paying GST dues subject to the following conditions -
Accounting entries of input tax credit in the books
|Input Tax Credit Guide | Input Tax Credit under GST||GST input tax credit means taxes paid on purchases can be claimed while paying GST dues. A person must be registered in GST to claim credit of input and all relevant conditions must be fulfilled|
|GST||Accounts & Records||gst-accounts-and-records||Accounts and Records under GST||Accounts and Records under GST - TaxGyata||What accounts and records to be maintained under GST? GST records must be maintained at least for 72 months.|
|GST||Appeal||gst-appeals||Appeals under GST||Appeals under GST - TaxGyata||A person aggrieved with the order passed by GST authorities may file an appeal to Appellate Authority within 3 three months from the date of order.|
|GST||Assessment & Audit||gst-assessment-and-gst-audit||Assessment & Audit under GST||
Assessment under GST
As per Section 2(11) of the CGST Act, “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgement assessment. GST law permit a registered person to rectify any incorrect details furnished in the returns. In terms of Section 39(9), if a registered person discovers any omission or incorrect particulars furnished in a return, he is required to rectify such omission or incorrect particulars in the return to be furnished for the tax period during which such omission or incorrect particulars as are noticed (on payment of due interest), unless the same is as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, or such rectification is time barred.
Types of Assessment in GST
As per section 59, "every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39". This means, every taxpayer shall be required to assess his tax dues in accordance with the provisions of GST law and report the basis of calculation of tax dues to the tax administrators, by filing periodic GST returns. The provisions of the law permit a registered person to rectify any incorrect particulars furnished in the returns.
It is important to note that ‘self-assessment’ does not confer authority of an assessing officer (called Proper Officer) on the taxpayer. Taxpayer must exercise this liberty to assess tax liability voluntarily with the perils of interest and penalty for any miscalculations or misinterpretations without usurping the role of Proper Officer. For eg. If tax is charged in excess to a customer and the same has been reported in GSTR 1 and paid in GSTR 3B, whether taxpayer on realizing the error, is required to file a refund claim under section 54 or free to adjust the excess with any other dues. And if the tax is correctly charged to customer but error is in GSTR 1 and GSTR 3B, whether taxpayer is still liable to file refund under section 54 or does section 59 permit taxpayer to suo moto adjust the excess by reducing any other tax payable.
|Assessment & Audit under GST - TaxGyata||When GST audit is required? Assessment in GST means a determination of tax dues under Goods and Services Tax Act and includes self-assessment.|
|GST||Demand and Recovery||gst-demand-and-gst-recovery||Demand and Recovery under GST||Demand and Recovery under GST - TaxGyata||Learn provisions of demand and recovery in GST. What to do after receiving GST demand notice? Steps to reply GST notice.|
|GST||E-Way Bill||e-way-bill||E way bill rules under GST||What is E waybill? E way bill rules under GST||E way bill is an electronic document carried by the transporter if the value of goods exceeds Rs 50000. E way bill is created on EWB system by registered person.|
|GST||GST Refund||gst-refund||Refund under GST||
When a refund is allowed under GST?
In the following cases, a refund can be claimed in Goods and Services Tax law-
(1) Excess payment of tax due to mistake or error
(2) Excess GST balance in Electronic Cash Ledger
(3) Unutilized input tax credit balance on account of inverted rated supply (Rate of GST paid on purchases higher than GST rate on output)
(4) Unutilized input tax credit balance on account of zero Rated Supply
(5) GST paid on an inter-state supply which later held as intra-state supply or vice-versa
(6) GST paid on a supply that is not rendered and an invoice for which has not been issued
(7) GST paid on zero-rated supplies
(8) Refund in respect of finalization of provisional assessment
(9) Refund in respect of the decision of any court, appellate authority, or appellate tribunal in favor of the taxpayer
(10) Taxes paid during the investigation (Pre-deposit)
What are the preconditions to claim a GST refund?
(a) Refund application must be filed within 2 years from the relevant date.
(b) GSTR-3B for the relevant month has been filled.
(c) Outward supplies must be taxable i.e. should not be nil rated or exempted
(d) Claimed refund amount should not be less than Rs 1000.
(e) In case of a refund of an input tax credit, the export supply shall not be subject to export duty and duty drawback of integrated tax paid has not been availed by the taxpayer.
(f) IGST amount has been deposited to the Government - in case of refund arises because of CGST/SGST paid on an inter-state supply which later held as intra-state supply or vice-versa.
What is the refund process under GST?
Steps to claim a refund under Goods & Services Tax is given below in the categorized manner-
Step 1: Filing of refund application
Online refund application will be filed in Form GST RFD-01 within 2 years from the relevant date. An application must be supported by documentary evidence proving the payment of tax, interest, or any other amount. Note, where a refund claimed by a taxpayer is less than 2 lakh, documentary evidence is not required to furnish.
Step 2: Securitization of application
At this step, the concerned officer will check whether the application filed by the applicant is complete or accurate in all aspects. If there is no issue with an application, the acknowledgment will be issued in GST RFD-02. This form will apparently specify that period of refund shall be counted from this date. In case of any variance in an application, the same will be communicated to the applicant in GST RFD03.
Step 3: Refund Order
The tax officer has to pass the refund order within 60 days from the date of receipt of a complete application. A refund order will be issued in GST RFD05 with payment advice in the form GST RFD06. The amount of refund will be automatically credited to the registered bank account of the taxpayer. In case of zero-rated supply, provisional refund order for 90% of the claimed amount shall be passed within 7 days of acknowledgment of application. A provisional refund order will be issued in GST RFD-04.
When interest is payable on refund under GST?
The taxpayer entitled to claim interest on a period of refund delay if the refund has not been processed by the concerned officer within 60 days from the date of receipt of the refund application. Amount of interest along with refund amount shall be credited electronically to a taxpayer registered bank account.
Refund forms under GST
Documents involved in the refund process are said to be GST refund forms. There is a total of 11 refund forms prescribed in GST law which are given below.
Computation of GST refund in various cases
Refund formula in case of export of goods or services, (Export turnover*Net input tax credit) / Adjusted total turnover Refund formula in case of inverted rated supply, (Inverted rated supply turnover*Net input tax credit) /Adjusted total turnover – Tax paid on inverted rated supply Explanation of terms used in the formula
|Refund under GST | GST Refund Process, Rules & Formula||Refund under Goods & Services Tax allowed in various cases including an excess payment of GST due to mistake or error. The process to claim a GST refund is given in easy steps.|
|GST||Invoicing||gst-invoice||GST invoice rules||GST invoice rules - TaxGyata||GST compliant invoice must be as per GST invoicing rules. Invoice should GSTIN of supplier and receiver, supplier and recipient details..|
|GST||Levy and Collection||levy-and-collection-in-gst||Levy and Collection under GST||Levy and Collection under GST - TaxGyata||GST is a single tax and will be collected on every supply of goods or services.|
|GST||Offences & Penalties||gst-offences-penalties||Offences and Penalties under GST||Offences and Penalties under GST - TaxGyata||Provisions of GST offences and penalties involved in GST are given in chapter XIX of the CGST act.|
|GST||Payment||gst-payments||GST payments||GST payments - TaxGyata|
|GST||GST Return||gst-return||GST return due dates||
GST return due dates applicable in June 2021 (Revised)
GST return due dates applicable in June 2021
|GST return due dates | Extended due dates chart||GST return due dates applicable in May, June and July 2021|