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Composition levy on GST IMPACT on Industry

Goods and Services Tax - GST - By: - CA.Tarun Agarwalla - Dated:- 25-1-2017 Last Replied Date:- 25-1-2017 - Composition scheme under Model GST Law, its impact on industry A. Introduction: 1. The New Model GST Law ( henceforth MGL ) as made available in the public domain as on 26th November 2016 have brought out many changes with respect to the provisions with respect to composition levy. Composition Levy has been present in indirect taxes to address the small business units or specific business .....

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the option to avail the composition scheme subject to restrictions and conditions. I e. works contractor (including Real estate, builders) and Retail traders having turnover up to specified threshold Limit. 3. At present with the current understanding of law, it can view that the composition scheme would only be available to small traders or specific manufacturers up to turnover limit of ₹ 50 Lakhs B. Laws of Composition Levy as per MGL 4. Eligibility and features for composition scheme un .....

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levy facility is to be used on all India PAN basis. It means all the registration across India belongs to the same PAN must avail the scheme. e) Once on a particular day, the aggregate turnover exceeds ₹ 50 lakhs, the scheme deemed to be withdrawn from such date. f) If the proper officer has reasons to believe that a taxable person was not eligible for the scheme, the taxable person shall pay tax under normal provisions and penalty. 5. Restriction for the scheme: - under the provision of .....

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mmendation of the Council. 6. The rate of Taxes and Input Tax credit: - Composition levy in lieu of tax is to be paid at a rate not less than 2.5 % in case of the manufacturer and 1% for others (basically Traders). Further, the taxable person opting for this scheme, neither entitled to collect any tax from the recipient and nor can avail any Input Tax Credit C. Transitional provision Switching over and other Issues 7. Where on any day any registered taxable person become ineligible for the schem .....

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arded as services and not goods. In this respect the following issues may found relevant:- a) The transitional provisions section 172 may be used fully for such cases where a composition dealer may not be eligible under MGL. b) Works contractor normally be under composition scheme of Sate VAT and service tax normally be paid under abatement forging the CENVAT on inputs. In this case the Cenvat Credit on stocks, semi fished and finished stocks may not be available under section 172 of MGL. Howeve .....

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172 or section 169 of MGL would come to rescue is subject to further analysis. 10. Some definitions which are very relevant to the subject of the composition are enumerated as follows:- a) aggregate turnover means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be. A .....

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