EXAMPLE-94
M/s XYZ Ltd is a toy manufacturing company; his aggregate
turnover in the preceding financial year 2016-17 is Rs. 38 lakh.
Following is the detail of one of the individual transaction of sale in the
month September 2017:-
Input purchased (excluding
tax) in the month: Rs.1 lakh
Input tax paid: Rs.24000
Profit margin: 10% of cost
CGST rate = 12% and SGST
Rate = 12%
(a)
Determine whether M/s XYZ
is eligible for composition scheme and if they take registration in composition,
determine sale price of above transaction and tax liability under GST.
(b)
If XYZ is also engaged in
inter- state outward supply of goods. Determine whether M/s XYZ eligible for
composition scheme.
Answer:-
(a)
M/s XYZ
aggregate turnover in preceding year is below Rs. 1 cr rupees and he is also not
engaged in inter-state outward supply of goods. Thus, as per provision of Section
10 he is eligible for composition scheme thus may opt for this scheme.
If
registration is taken as composition levy then manufacturer is liable to pay tax @
of 1 % of the turnover. Input credit
is not allowable under this Scheme even when tax is not chargeable on sale.
Calculation
of tax liability for the month of September
| Particulars | Amount (Rs) | |
| (i) | Purchase Cost | 100,000.00 |
| (ii) | Taxes paid | 24,000.00 |
| (iii) | Total purchase cost | 124,000.00 |
| (iv) | Profit margin @10% | 12,400.00 |
| (v) | Tax under GST | - |
| (vi) | Customer Price | 1,36,400.00 |
| (vii) | Tax payble in respect of this month @ 1% | 1,364.00 |
| (The registered person under this scheme is required to furnish tax return on quarterly basis by 18th of the month succeeeding the quarter) | ||
(b)
section 10(2) specifies that supplier engaged in making inter-state outward
supplies of goods is not eligible for composition levy.
Thus tax liability
for the month of September would be as follows;
| Particulars | Amount (Rs) | |
| (i) | Purchase Cost | 100,000.00 |
| (ii) | Total purchase cost | 100,000.00 |
| (iii) | Profit margin @10% | 10,000.00 |
| (iv) | total | 110,000.00 |
| (v) | Tax under GST (CGST +SGST)@ 24% | 26,400.00 |
| (vi) | Customer Price | 136,400.00 |
| (vii) | Tax payble | 26,400.00 |
| Less: | Input tax credit | 24,000.00 |
| tax to be paid | 2,400.00 |
Note: As per Press release dt. 10.11.2017 the Annual Turnover Eligibility for
opting the composition scheme will be extented to 1.5 cr.However the same has
not been implemented as no notification has been issued by the govt yet.