Under the Goods and Services Tax (GST), traders, manufacturers and restaurants or Dhabas, who are doing business up to Rs 75 lakh per annum, can avoid flat GSTs by making flat GST of 1 to 5 percent and offering long-range returns and books. In the 16th meeting of the GST Council on Sunday, the scope of composition scheme has been increased from 50 lakh to 75 lakh rupees for such businessmen. At present, this scheme is applicable in the VAT regime, where the scheme utilizes turnover upto Rs 50 lakhs.
Twenty million rupees are exempted from the GST till turnover, in such a case, between 20 to 75 lakh annual turnover will be in its scope. GST Expert Rakesh Garg said, “Under the composition scheme, manufacturers will have to give a total of 2 percent GST, which will be 1 percent CGST and 1 percent SGST. The total rate for restaurant and dhaba will be 5 percent, of which 2.5 percent will be CGST and 2.5 percent SGST. The total rate for traders and other traders will be 1 percent, which will be 0.5 percent CGST and 0.5 percent SGST. They said that these businessmen can neither issue invoices nor receive input tax credit. Service providers have not been given place in this scheme.
According to CA Manish Vashisht, the total supply of these businessmen will be GST from the same rate, regardless of the GST rate on their luggage. He estimated that if Net Tax Liability (after input credit) of 4-5 thousand rupees (after input credit) of a regular dealer with a 18 percent rate of sales of 1 lakh rupees, then the net liability of composition dealer with 1-2 percent rate is Rs 1000 to Rs 2,000. It just settles. In this case, this scheme is very beneficial for dealers with limited and fixed sales.
According to Anand Tiwari, Additional Commissioner of Delhi VAT Department, the composition scheme offers a flat lower rate to the business, while the Compliance releases many formalities in the Compliance. Composition Dealers will have to fill only quarterly returns in GST, while others will fill monthly returns. The need for account book and record maintenance also decreases to about quarter. The purpose of the scheme is to extend the extent to the small traders to one extent that they can focus on their business by leaving the concern of the tax compliance.