Great Relief to Small Traders and Restaurants in GST

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.


  1. GST Rates for small Traders/Business Men registered under COMPOSITION SCHEME are not Logical. For example, Trader buying common garments/goods from Delhi and selling in retail in Delhi only is possibly pay GST @1% on gross sale which is not logical at all. All such traders are to be PAN Holders and are bound to file ITRs. Tax in ITRs is paid/charged on the amount earned/profit and on gross sales. Similarly the GST too be charged/paid on the ITR amount only which is not logical only is justified also. Such Traders have paid GST on the amount of Goods purchsed, Therefore chargeing / paying GST once again on the Gross sale is neither justfied nor logical. Charging GST on their amount of Income only is not logical only it is justified, simple and hasle free too.

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