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COMPOSITION SCHEME IN PROPOSED GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 6-9-2016 Last Replied Date:- 6-9-2016 - Goods and Services Tax (GST) is going to be a reality in near future - could be by April, 2017 or few months later. GST is a new tax in India which shall be levied and collected as an indirect tax on supply of goods and services. 'Goods' and 'Services' are defined in section 2(48) and 2(86) of the model law as well as in the Constitution. What is GST is also defined in articl .....

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thstanding anything to the contrary contained in the Act but subject to sub-section (3) of section 7, on the recommendation of the Council, the proper officer of the Central or a State Government may, subject to such conditions and restrictions as may be prescribed, permit a registered taxable person, whose aggregate turnover in a financial year does not exceed [fifty lakh of rupees], to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less .....

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ithout affording a reasonable opportunity of being heard to the person proceeded against. According to proposed scheme of the composition levy, following points are worth nothing - Composition scheme shall be subject to section 7 on levy and collection of GST but shall override other provisions of the law. Composition scheme shall be based on recommendations of the GST Council Composition scheme shall be subject to prescribed conditions and restrictions (to be prescribed) Under the composition s .....

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sition scheme is opted for, taxable person will not be allowed or shall not collect any tax from the recipient of supplies. Taxable persons under composition scheme shall also not be entitled to any input tax credit. Where composition scheme is wrongly availed, proper officer may require such person to pay for taxes payable under the Act and an equal amount of penalty shall also be payable. Such penalty shall be levied only after affording a reasonable opportunity of being heard to the taxable p .....

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stipulation that rate of levy shall not be more than the cap which ought to be prescribed. Like one percent, there may be a range prescribed. The scheme shall allow a person to enter or exit the scheme at any time and made applicable to inter-state supplies also. As IGST is not included, the scheme users may not be many. The restriction on inter-state supplies also goes against the concept of GST itself (one India, one tax). Penalties proposed are too harsh and high i.e., equal to amount of tax. .....

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