New Delhi: Manufacturers of ice cream, tobacco products and service providers, except restaurateurs, cannot avail of the Composition Scheme under the Goods and Services Tax (GST), Revenue Secretary Hasmukh Adhia said on Wednesday.
“Suppliers of services, except restaurants, and any person who makes inter-state supplies or is engaged in manufacturing of certain goods, namely ice-cream, pan masala or other tobacco products and tobacco substitutes, is not eligible for Composition Scheme,” he said.
Adhia was speaking at the “GST-Ki-Master Class” held for traders, tax practitioners and all officers of the Central Board of Excise and Customs and state governments.
For the scheme, aggregate turnover of the business will determine the eligibility. “Total all-India turnover of all units under same PAN will be included. It will also include value of exempt supplies and exports. Composition Scheme, if availed, shall include all registered persons having same PAN.”
Apart from the above exclusions, traders, manufacturers and owners of restaurants who have turnover below Rs. 75 lakh will have to pay one per cent, two per cent and five per cent tax, respectively, if they opt for the Composition Scheme under the GST.
However, the Composition Scheme availability to a person shall lapse with effect from the date of his reaching the threshold turnover of Rs. 75 lakh, Adhia noted.
“If a trader feels his turnover will be below Rs. 75 lakh and starts with Composition Scheme, but finds that say by December, Rs. 75 lakh turnover has been reached. As soon as he reaches Rs. 75 lakh turnover, immediately he has to ask for a regular scheme.
“At the time the transition is being made, for any stock left unsold as on the date of transition from Composition Scheme to regular registration, he can take input tax credit,” he said.
The trader under the Composition Scheme is not entitled to take input tax credit.
But if a person registers as a normal taxpayer and his turnover remains below Rs. 75 lakh, he cannot switch to the Composition Scheme in the middle of the year and can opt for it only in the next financial year.
“Anybody who registers as a regular taxpayer, but in-between he feels the turnover is going to be less than Rs. 75 lakh, he cannot opt for Composition Scheme during the year. He will have to wait for the year to be over. He can opt for Composition Scheme only the next year,” he said.
Moreover, all the the traders will have to mention that he is a “composition taxable person” on notice or sign board displayed at a prominent place at his place of businesses.
Also, on the bill of supply, the trader needs to mention that he is a “composition taxable person, not eligible to collect tax on supplies”.
Businesses, who have Provisional Identity for Registration (PID) and who have opted for the Composition Scheme need to submit intimation of option in the prescribed form on the Goods and Services Tax Network (GSTN) portal on or before July 21.
A person seeking fresh registration can also opt for composition scheme at the time of filing of registration form.