EXAMPLE

Determine whether Following are eligible for Composition Levy

(a)    Person making import or export of goods

(b)    Chartered Accountant providing professional services below 1 crore in the preceding year.

(c)    ABC Ltd. has two segment of production one is segment A for product Pet coke (fuel) and another segment B for Product Refectory (Bricks). ABC Ltd., voluntarily takes separate registration but opting for composition levy for segment B only.

(d)    X being an Individual engaged in manufacturing of SS Pipes/Tubes having plant/manufacturing facilities in Ahmedabad in Gujarat as Head Office and the  Supply of Product is  taxable under GST. it is also having a Branch office in Chennai (Tamil Nadu). Sales are made both from Ahmadabad & Chennai. The aggregate turnover of X is below 1 crore in the preceding FY. Both units are making intra state supply and opts for composition levy.

(e)    Mr A having turnover of 25 lakh in preceding year but making supply through E-commerce operator.

 

ANSWER

Nature of activity

 

Eligible for composition levy

 

Remarks

 

(a)                Person making import or export of goods

 

 

 

  (b)               Chartered Accountant providing professional services below Rs. 1 crore in the preceding year.

 

 (c)                ABC Ltd. has two segments of production one is segment A for product Pet coke (fuel) and another segment B for Product Refectory (Bricks). ABC Ltd., voluntarily take separate registration but opting for composition levy for segment B only.

 

 

(d)               X being an Individual engaged in manufacturing of SS Pipes/Tubes having plant/manufacturing facilities in Ahmadabad in Gujarat as Head Office and the  Supply of Product is  taxable under GST. it is also having a Branch office in Chennai (Tamil Nadu). Sales are made from both Ahmadabad & Chennai. The aggregate turnover of X is below Rs.1 crore in the preceding FY. Both units are making intra state supply.

 

 (e)                Mr A having turnover of 25 lakh in preceding year but making supply through E-commerce operator.

 

 

No

 

 

 

 
 

  No

 

 

 

 No

 

 

 

 

 

 

 

 

Yes

 

 

 

 

 

 

 

 

 

 

No

Definition of IGST under Section 2(c) of IGST Act, 2017, specifies that if the transaction made in course of import/export, then it is deemed to be an inter-state supply. Hence a person cannot take registration under composition scheme.

Applicable only for intra-state supplies (i.e. supplies within a state).

 

 

  According to section 10(2)(a) a person engaged in supply of services, other than supply of food or drinks for human consumption cannot opt for this scheme.

 

 

  Proviso to section 10(2) provides that where more than one registered person are having the same PAN , then one registered person shall not be eligible to opt for  composition scheme unless all such registered persons opt to pay tax under this scheme.

In view of above provision the composition scheme will be applicable for both the business verticals. The dealer cannot opt for any one business vertical for the composition scheme.

 

 

 

 

Proviso to section 10(2) provides that where more than one registered person are having the same PAN, the one registered person shall not be eligible to opt for  composition scheme unless all such registered persons opt to pay tax under this scheme.

 

Thus if want to opt for composition scheme then both head office in Gujarat and branch office in Chennai will have to opt for composition scheme.

 

 

 

 


 

As per Section 10(2) person making supply through E- commerce operator shall not be eligible for composition scheme.

 

Thus, Mr. A is not eligible for composition scheme.

 

 

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.