Levy and Collection Under GST – Advanced Tax Laws and Practice Important Questions

Question 1.
Parikh is a practising Company Secretary at Mumbai. His gross fee receipts for the financial year 2018-19 was ₹28 lakhs. He estimated his gross receipts at ₹32 lakhs for the financial year 2019-20. He wants to avail composition scheme for the financial year 2020-21. Briefly narrate whether he can avail composition scheme for the financial year 2020-21 with attendant conditions. Will he be eligible to avail input tax credit? Can he issue tax invoice?
Answer:

Applicability of Composition Scheme

The new composition scheme, introduced vide section 10(2A) of CGST Act, provides for concessional rate of tax particularly to the suppliers of services. It is applicable to suppliers of services who have to pay tax at a rate of 696 (396 CGST and 396 SGST). The basic condition for its applicability is that the Aggregate turnover of the person in preceding financial year must not have exceeded ₹50 lakhs.

In the present case, since Mr. Parikh has estimated turnover of ₹32 lakhs in the year 2019-20 which is below the minimum threshold of ₹50 lakhs, he can avail the new composition scheme for supply of service in the F.Y. 2020-21.

The registered person opting for new composition scheme is not eligible to avail input tax credit nor shall he be eligible to charge output tax from its recipients of supply. The registered person shall issue bill of supply instead of tax invoice.

Question 2.
Gokhale & Sons is registered in Karnataka and paying GST under composition scheme, provides the following details for the tax period ended on 31st December, 2020:

Particulars

Amount (₹)

Taxable turnover of goods within state 25,00,000
Exempted turnover of goods within state 27,00,000

Answer:
As per amendment in Notification No. 8/2017 vide Notification No. 1/2018 Central Tax dated 01.01.2018, effective rate of tax under composition scheme for manufacturers has been reduced from 2% to 1% (CGST + SGST) w.e.f. 01.01.2018. Thus, w.e.f. 01.01.2018, uniform rate of 1% is applicable for both manufacturers and traders paying tax under composition scheme.

Further, Notification No. 8/2017-Central Tax, dated 27.06.2017 has also been amended to provide that for other categories of composition suppliers (other than manufacturers and restaurants), composition tax would be leviable as percentage of turnover of taxable supplies of goods. Prior to the amendment, the tax was payable as a percentage of the total turnover.

Hence, total tax will be as follow:

(i) ₹52,000 (1% of 52,00,000) (if Gokhale & Sons is a Manufacturer)
(ii) ₹25000 (1% of 25,00,000) (if Gokhale & Sons is a Trader)

Question 3.
Explain by giving brief reasons in the context of provisions contained under the CGST Act, 2017 pertaining to composition scheme:

  1. Can a registered person, who purchases goods from a supplier paying tax under the Composition Scheme, avail credit of tax paid on purchases made from the composition dealer?
  2. Can a person paying tax under the Composition Scheme issue a tax invoice under GST?
  3. Can a person who has opted to pay tax under the Composition Scheme avail Input Tax Credit on his inward supplies?

Answer:

  1. No, as the composition dealer cannot collect tax paid by him on outward supplies from his customers, the registered person making purchases from a taxable person paying tax under the composition scheme cannot avail credit of tax.
  2. No, the person shall be issuing a bill of supply in lieu of tax invoice.
  3. No, as per section 10(4) of CGST Act, 2017 person opting to pay tax under the composition scheme cannot avail credit on his inward supplies.

Question 4.
Explain: Composition Levy?
Answer:
Composition levy is an optional alternative method of levy of tax designed for small taxpayers:-
Provisions for the same are in section 10 of CGST Act, 2017.

(a) Threshold limit viz. aggregate turnover in state of taxable person should not exceed 11.5 crore (ort 75 Lakh in special category states)

(b) Rates of composition levy Le. 1% of Total turnover for manufacturers, 1% of Taxable turnover for traders, and 5% of turnover for restaurants. There are other conditions, which need be fulfilled to avail of composition levy and further, there are restrictions as to input tax credit.

Question 5.
X is a registered trader in Ghaziabad (Uttar Pradesh). In the Financial Year 2020-21 total value of supplies are as follows:

  1. Intra-state supplies made under forward charge: ₹35 lakh
  2. Intra-state supplies made which are chargeable to GST at Nil rate: ₹25 lakh
  3. Intra-state supplies of goods which ace wholly exempt under section 11 of CGST Act: ₹30 lakh
  4. Value of inward supplies on which tax payable under Reverse Charge Basis (RCM): ₹20 lakh

Briefly explain whether X is eligible to opt for Composition Scheme in the financial year 2021 – 22?

Answer:
As per section 10 of CGST, 2017, a registered person, whose aggregate turnover in the preceding financial year did not exceed ₹1.5 crore or ₹75 lakhs in notified special category states, as the case may be may opt for Composition Scheme.

As per section 2(6) of CGST Act, 2017, “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number.

Computation of Aggregate Turnover in FY 2020-21:

₹ in lakhs

Intra-state supplies made under forward charge

  35

Intra-state supplies made which are chargeable to GST at Nil rate

  25

Intra-state supplies of goods which are wholly exempt under section 11 of CGST Act, 2017

  30

Value of inward supplies under Reverse Charge Basis (not to be included in computing aggregate turnover)

Nil

Total

90

Since, aggregate turnover does not exceed ₹1.5 crore during the financial year 2020-21, Mr. X is entitled for Composition Scheme for FY 2021-22. Note: Aggregate Turnover threshold limit of ₹1.5 crore is considered as supplier Mr. X is registered in Uttar Pradesh i.e. other than special category State.

Question 6.
Mr. Shankar is running a fancy store and is also having a consulting firm, registered under the same PAN. During the earlier year, the turnover was ₹150 lakhs in the grocery stores and receipts in the consulting firm was ₹9 lakhs. In the light of these facts, answer the following:

(i) Examine whether Mr. Shankar eligible to opt for Composition Scheme under CGST Act.
(ii) Can he opt for the Composition Scheme in respect of the grocery store alone, though he has the consulting firm also, in addition to the store?
Answer:
Eligibility to opt for Composition Scheme

(i) No, Shankar is not eligible for Composition Scheme. The reason is that the turnover in the earlier year was in excess of ₹150 lakhs.

Note: W.e.f. 01.02.2019, other services, with restaurant & catering services, also eligible vide CGST (Amendment) Act, 2018 for composition scheme, subject to 10% of turnover in a State or Union Territory in preceding financial year or 5,00,000 whichever is higher.

(ii) No, it is not possible for Mr. Shankar to opt for Composition Scheme, for the grocery store alone. All the registrations under the same PAN have to opt for composition scheme in terms of proviso to section 10(2) of the CGST Act, 2017.

Question 7.
Ganga Co. Ltd. commenced business on 01-07-2020. It applied for registration on 05-08-2020. The registration was granted on 07-08-2020. What Is the effective date of registration? Instead of 01-07-2020, if it had commenced business on 20-07-2020, what would be your answer?

Ganga Co. Ltd. is an authorized dealer of two-wheeler vehicles. Its sales turnover was ₹125 lakhs for the year ended 31-03-2021. It also provided after sales service to customers for ₹7 lakhs. Is it eligible for composition levy for the financial year 2020-21?
Answer:
Effective date of registration:

As per rule 10(3) of CGST Rules, 2017 if the applicant has submitted an application for registration after the expiry of 30 days from the date of his becoming liable to registration, the effective date of registration shall be the date of the grant of registration.

Ganga Co. Ltd. commenced business on 01.07.2020 but applied on 05.08.2020 and it was granted on 07.08.2020. Since, the application for registration has been made after the expiry of 30 days from the date when it was liable to obtain registration; the effective date of registration would be the date of grant of registration ie. 07.08.2020.

If it had commenced business on 20.07.2020, the application for registration submitted within 30 days i.e. 07.08.2020, hence the effective date of registration would be 20.07.2020.

Eligibility for composition levy:

Under section 10 of the CGST Act, a registered person opting to pay tax under composition levy can apart from manufacture/supply of goods, provide service not exceeding 10% of total turnover or ₹5 lakhs whichever is higher. In this case the annual turnover is ₹125 lakhs and hence the higher of the two limits is ₹12.5 lakhs; the amount received by way of supply of service is ₹7 lakhs which is less than 10% of the total turn over. Hence, Ganga Co. Ltd. is eligible for composition levy.

Author’s Note:
It is actually a question testing knowledge on REGISTRATION provisions as well as Composition levy.

Question 8.
What is GST Composition Scheme? What is the GST Composition Scheme Limit?
Answer:
GST Composition scheme is a tax paying mechanism offered to small businesses. When compared to normal GST filing, the composite scheme offers two main benefits: reduced paperwork and compliance, and lower tax liability.

For instance, normal taxpayers need to submit 3 monthly GST returns (GST-1, GST-2, and GST-3) and one annual return (GST 9). However, if you’ve applied for the composition scheme, GST filing gets easier as you need to file just one Annual return (GSTR 4), and on quarterly basis a statement in Form GST CMP-08 shall be furnished to declare details of tax paid.

The composition scheme limit under GST varies depending on the type of business:

For manufacturers and traders: As a newly registered business, your turnover should not exceed ₹1.5 crore in the current financial year. If you have already registered, then your turnover must not exceed ₹1.5 crore in the previous financial year.

For restaurants not serving alcohol: The above provisions apply here as well.

For service providers:
As a newly registered business, your turnover should not exceed ₹50 lakh in the current financial year. If you have already registered, then your turnover must not exceed ₹50 lakhs in the previous financial year [Section 10(2A) of CGST Act].

Additionally, the ₹1.5 crore cap is further limited in Special Category States to ₹75 lakh.

Further, in the event that your turnover exceeds the specified composition scheme limit in a financial year, you will have to convert to the regular GST payment mechanism.

Question 9.
State the necessary pre-conditions for levy of Goods and Services Tax (GST) on goods and services?
Answer:
The following conditions are required to be satisfied for a transaction to be chargeable to Goods and Services Tax, ie:
(a) It involves supply of goods or services or both in terms of Section 7 of the CGST Act, 2017;
(b) The supply is a taxable supply; and
(c) The supply is made by a taxable person.

Question 10.
(i) B, a supplier registered in Chennai (Tamil Nadu) procures goods from China and directly supplies the same to a customer in UAE without bringing to India. With reference to the provisions of GST law examine whether the supply of goods by B to customer in UAE is an inter-state supply and is it either import or export in terms of Customs Act, 1962?

(ii) Is a dealer, who is not required to be registered because he has not crossed the turnover limit, required to pay GST under reverse charge in respect of supplies for which reverse charge is applicable?
Answer:
(i) The transaction undertaken by Mr. B is neither import nor export of goods in terms of Customs Act, 1962.

However, it is an inter-state supply in terms of provision of section 7(5)(a) of IGST Act, 2017, which provides that when the supplier is located in India and the place of supply is outside India, supply of goods or services or both shall be treated to be a supply of goods or services or both in the course of inter-state trade.

(ii) Yes, as per section 24 of CGST Act, 2017 the taxpayer who is required to pay tax under reverse charge have to compulsorily register under GST and threshold limit of ₹20 lakhs shall not be applicable to him.

Question 11.
Siddharth Transports Ltd., is running a regular tourist bus service, carrying passengers and goods from Coimbatore, Tamil Nadu to Trivandrum, Kerala, with effect from 1st August, 2017. Discuss whether such inter-state movement of various modes of conveyance carrying goods or passengers or both, between distinct persons as specified in section 25(4) of the CGST Act, 2017 [except in cases where such movement is for further supply of the same conveyance], is leviable to IGST.
Answer:
The legal provisions in GST laws are as under:
(a) As per section 24(1) of the CGST Act, persons making any inter-State taxable supply shall be required to be registered under this Act.

(b) As per section 25(4) of the said Act a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

(c) Schedule I of the said Act specifies situations where activities Eire to be treated as supply even if made without consideration which also includes supply of as specified in section 25, when made in the course or furtherance of business.

(d) Section 7(2) of the CGST Act envisages that activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

The issue of inter-state movement of goods like movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the said Act, not involving further supply of such conveyance, including trucks, buses, etc., (a) carrying goods or passengers or both; or (b) for repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance] was discussed in GST Council’s meeting held on 11th June, 2017 and the Council recommended that such inter-state movement shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be leviable to IGST.

In view of above, the inter-state movement of goods like movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the CGST Act including TRUCKS, BUSES, TRAINS, TANKERS, TRAILERS, VESSELS, AIRCRAFT ETC., may not be treated as supply and consequently IGST will not be payable on such supply.

(Reference in this regard may be made to Circular No. 1/1/2017-IGST dated 07.07.2017)

Question 12.
From the following information, compute the SGST/CGST/IGST payable for the month of April, 2021:
(1) Sales of mixers of grinders within the State (taxable 2,20,00,000 value)
(2) Sales of mixers of grinders outside the State (taxable 1,40,00,000 value)
(3) Value excluding taxes of steel jars supplied free to 7,00,000 buyers, as per promotion scheme for sales outside the state:
(4) Cash incentive given to dealers outside the State for 3,28,000 achieving target during the year 2017-18:
(5) Taxable value of supplies of parts, made free to fulfil 1,50,000 warranty obligations
(6) Late payment penalty collected from dealers for delayed 50,000 payments (intra-State only)
Answer:
Computation of CGST, SGST and IGST payable for the month of April, 2021:

Particulars

CGST (₹)

SGST (₹)

IGST (₹)

1. Sales of Mixers of grinders within the state (₹ 2,20,00,000 × 9% each)

19,80,000

19,80,000

2. Sales of Mixers of grinders outside the state (₹ 1,40,00,000 × 18%)

25,20,000

3. Steel bars supplied free to buyers of mixers as per promotion scheme for sales outside the state

4. Cash incentive given to dealers outside the state for achieving target during the year 2017-18

5. Supplies of parts made free to fulfil warrantly obligations

6. Late payment penalty collected from dealers for delayed payments (Intra-state only) [₹50,000 × 9% each]

4,500

4,500

Total GST Payable 19,84,500 19,84,500 25,20,000

Notes:

1. GST tax rate on mixers of grinders is assumed to be 18%.

2. Activities without consideration shall be treated as supply for cases covered under Schedule I read with section 7 of the CGST Act, 2017. In this case jars have been supplied free to customers to promote the sale. Hence, not taxable subject to input tax credit on the inward supply of such jars has been blocked as provided under section 17(5)(h) of the CGST Act, 2017.

3. In the absence of prior understanding about the discount (though called incentive), it is not deductible from the value. Moreover incentive is not linked to each invoice.

4. Supplies of parts made free to fulfil warranty obligations are not considered free supplies since the value of supply made earlier includes the charges to be incurred during the warranty period, hence no GST is chargeable on such replacements.

5. Penalty, late fee or interest collected from the recipients is includible in consideration for tax purposes as per the provisions of Section 15(2)(d) of CGST Act, 2017.

Question 13.
CMA Mr. Sandesh, an unregistered person under GST, has place of profession in Bhubaneswar, Odisha, supplies taxable services to Infosys Ltd., a registered person under GST in Bangalore.
(i) Is it inter-State supply or intra-State supply?
(ii) Who is liable to pay GST?
Note: CMA Mr. Sandesh turnover in the P.Y. is ₹18 lakhs.
Answer:
Any person making inter-state supply has to compulsorily obtain registration. However, service providers providing aggregate supplies including interstate services up to ₹20 lakh will be exempted from registration under GST.

(i) It is inter-state supply.
(ii) CMA Mr. Sandesh is not liable to pay IGST if he chooses not to register under GST. Since, registration is not made mandatory to him. Infosys Ltd. will also not be liable to pay GST under RCM as section 9(4) applies only to notified cases.

Question 14.
What is the difference in tax consequence between intra-State (from HO to branch in same State) and inter-State stock transfers (from HO to branch in different State) of the same supplier, which is a private limited company? What kind of GST will be levied?
Answer:
GST will be leviable only where the supply is made by an entity having a GST number to another GST number. Where a supplier has branch within the same State, only one GST registration and GST number will be there. Hence transfer to a branch within the same State will not attract any GST.

Where the company has a branch in another State, separate registration is required in the said State, hence the GST number in that State will be different.

As a consequence, when the company transfers stock to its branch in different State, it will be treated as inter-State supply. As a consequence, IGST will be leviable.

Intra-state stock transfer is taxable only when entity has more than one registration in one state. In that case, CGST plus SGST will be levied.

Question 15.
What are inter-state supplies under GST?
Answer:
As per Section 7 of the IGST Act, 2017, supply of goods and/or services in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in

  • two different States;
  • two different Union territories;
  • a State and a Union territory further,
  • import of goods and services;
  • supplies where the supplier is located in India and the place of supply is outside India;
  • supplies to/by SEZ units or developer; or any supply that is not an intra-state supply shall be treated to be supply of goods and/or services in the course of inter-State trade or commerce.

Question 16.
Mr. Bhudev Aggarwal, an unregistered person receives commission of ₹21,00,000 as an insurance agent from insurance company. Will he be required to charge GST on the same?
Answer:
Though commission for providing insurance agent’s services is liable to GST, the tax payable thereon is to be paid by the recipient of service Le., insurance company, under reverse charge in terms of Notification No. 13/2017 CT(R) dated 28.06.2017. Thus, Mr. Bhudev Aggarwal will not be liable to pay GST on such commission. Instead, the insurance company will pay tax under reverse charge on this particular transaction.

Question 17.
Mr. Shyam Ahuja, an unregistered famous author, received ₹3 crores of consideration from Har Shiv Publications (HSP) located In Indore for supply of services by way of temporary transfer of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to Original literary works of his new book. He finished his work & made available the book to the publisher, but has yet not raised the invoice. Mr. Shyam Ahuja is of the view that HSP is liable to pay tax under reverse charge on services provided by him. HSP does not concur with his view and is not ready to deposit the tax under any circumstances. Examine whether the view of Mr. Shyam Ahuja is’correct. Further, if the view of Mr. Shyam Ahuja is correct, what is the recourse available with Mr. Shyam Ahuja to comply with the requirements of GST law as HSP has completely refused to deposit the tax.
Answer:
Yes, the view of Mr. Shyam Ahuja is Correct.

GST is payable under reverse charge in case of supply of services by an author by way of transfer/permitting the use or enjoyment of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original literary work to a publisher located in the taxable territory in terms of reverse charge Notification No. 13/2017-CT(R) dated 28.06.2017.

Therefore, in the given case, person liable to pay tax is the publisher – HSP. However, since HSP has completely refused to deposit the tax on the given transaction, Mr. Shyam Ahuja has an option to pay tax under forward charge on the same. For the purpose, he needs to fulfil the following conditions:

(i) since he is unregistered, he has to first take registration under the CGST Act, 2017;

(ii) he needs to file a declaration, in the prescribed form, that he exercises the option to pay CGST on the said service under forward charge in accordance with section 9(1) of the CGST Act and to comply with all the provisions as they apply to a person liable for paying the tax in relation to the supply of any goods and/or services and that he shall not withdraw the said option within a period of 1 year from the date of exercising such option;

(iii) he has to make a declaration on the invoice, which he would issue to HSP in prescribed form.

Question 18.
Mr. Sanjay of New Delhi made a request for a motor cab to “Super Ride” for travelling from New Delhi to Gurgaon (Haryana). After Mr. Sanjay pays the cab charges using his debit card, he gets details of the driver Mr. Jorawar Singh and the cab’s registration number, “Super Ride” is mobile application owned and managed by D.T. located in India. The application “Super Ride” facilitates the potential customer to connect with the persons providing cab service under the brand name of “Super Ride”. D.T. Ltd. claims that cab service is provided by Mr. Jorawar Singh and hence, he is liable to pay GST under the provisions of GST laws.

With reference to the provisions of IGST Act, 2017, determine who is liable to pay GST in this case Would your answer be different, if D.T. Ltd. is located in New York (USA)? Also briefly state the statutory provisions involved.
Answer:
Section 5 of IGST Act, 2017 provides that tax on inter-state supplies of specified services notified by Government shall be paid by Electronic Commerce Operator located in taxable territory if such services are supplied through it.

Services by way of transportation of passengers by a motor cab supplied through ECO is one of the notified services. Electronic Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for supply of goods or services or both, including digital products over digital or electronic network.

Since DT Ltd. owns and manages a mobile application to facilitate supply of passenger transportation service in motor cabs over a digital network, it is an ECO. Thus, DT Ltd., an ECO located in India is liable to pay GST in the given case.

However, where an ECO does not have a physical presence in the taxable territory, person representing ECO is liable to pay tax. Further, where ECO has neither the physical presence nor any representative in the taxable territory, person appointed by the ECO for the purpose of paying tax is  liable to pay the tax.

Accordingly, if DT Ltd. is located in New York (USA), any person representing DT Ltd. for any purpose in India is liable to pay tax. Further, if DT Ltd. also does not have a representative in India, it shall appoint a person in India for the purpose of paying tax and such person shall be liable to pay tax.

Author’s Note:

If in this Question, it is intra-State supply instead of inter-State supply, then it would be covered by section 9(5) of CGST Act. The fundamental of sub-section (5) is same of section 9 of CGST Act and section 5 of IGST Act.

Levy And Collection Under Gst (Including Composition Levy) Notes

  • Sections involved: 9 and 10 of CGST Act.

Section 9: Levy and collection of CGST/Section 5: Levy and collection of IGST

  • Levy of “CGST + SGST/UTGST”, as the case may be in case of Intra-state supply of goods and/or services.
  • Levy of “IGST” in case of Inter-state supply of goods and/or services, (section 5 of IGST Act)
  • GST is charged on value as determined in section 15 of the CGST Act.
  • Rates of GST are set by Central Government by way of notification. However, the maximum rate of total GST cannot exceed 40%. (CGST + SGST/IGST)
  • GST is not chargeable on supply of Alcoholic liquor for Human consumption.
  • Levy of GST on petroleum products is to be effective from a notified date in the future. (In short, temporarily 5 petroleum products are kept out of levy of GST.)
  • Reverse Charge Mechanism – RCM (i.e. recipient of supply is liable to pay GST) is applicable in notified cases.
  • Also, RCM is applicable for notified persons on notified goods /services when received from unregistered suppliers.
  • E-commerce Operator (ECO) is liable to pay GST on notified services when supplied through it. (3 services notified are: Transportation of passengers by radio taxi/motor cab/maxi cab/motor cycle, Accommodation services by unregistered persons & House-keeping services by unregistered persons). Provisos 1st: If ECO does not have physical presence in India, then his representative shall be liable to pay tax.

2nd: If there is no representative also, then ECO should appoint rep¬resentative for purpose of paying tax.

  • Composition scheme is discussed in section 10 of CGST Act

a. It is optional scheme

b. Eligibility: Aggregate Turnover as per section 2(6) of a registered person is upto 11.5 crore/? 75 lakhs* in the preceding Financial Year.
(‘Arunachal Pradesh, Mizoram, Tripura, Manipur, Nagaland, Uttarakhand, Meghalaya & Sikkim)

c. Rates of tax under Composition scheme:
Manufacturer: 1% of turnover in the state or UT. (CGST: 0.5% + SGST/UTGST: 0.5%)
Restaurant Service: 5% of turnover in the state or UT. (CGST: 2.5% + SGST/UTGST: 2.5%)
Other Suppliers: 1% of the turnover of taxable supplies in the state or UT.
(CGST: 0.5% + SGST/UTGST: 0.5%)

d. Extent of services that can be supplied by registered persons opting for composition scheme:
Higher of 2: 10% of turnover in a state/UT in the preceding F.Y. or ₹ 5,00,000
e. Persons not eligible to opt for composition scheme (6 categories)
f. Option of Composition scheme lapses during the F.Y. when turnover exceeds ₹ 1.5 crores/₹ 75 lakhs in the year.
g. Composition tax is not to be collected from recipients.
h. Input Tax Credit cannot be availed by registered persons opting for a composition scheme.
L Composition scheme is not applicable for tax payable under reverse charge mechanism.

  • Section 10(2A) scheme: Composition scheme for service suppliers and Mixed suppliers

a. Optional scheme
b. Eligibility: Registered persons whose aggregate turnover in preceding financial year has not exceeded ? 50,00,000 and he is not eligible to pay tax as per section 10(1) i.e. the earlier discussed composition scheme.
c. Rate of Tax: CGST @ 3% + SGST @ 3% of aggregate turnover.
d. There are other conditions to be satisfied to opt for section 10(2A) of CGST Act.
e. It is to be noted that most of things are same for section 10(2A) as are applicable in cases of section 10(1).

  • Registered Persons opting for section 10/ 10(2A) have to issue a “Bill of Supply” instead of Tax invoice for outward supply as they are not entitled to collect GST from recipient of supply.
  • Registered Persons opting for section 10/10(2A) has to furnish a statement in GST CMP-08 by the 18th day of the month succeeding such quarter and a Return in Form GSTR-4 for every financial year on or before 30th day of April following the end of such financial year.

CS Professional Advance Tax Law Notes