COMPOSITION TAXPAYER

  • October 27, 2020
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Subject: Economy

Context: Over 3.5 lakh composition taxpayers under GST will now have the facility of filing NIL return by just sending a SMS.

Concept:

Composition Scheme

  • Taxpayers under the composition scheme of the GST will now have more relaxed rules with an increased turnover limit for the applicability, inclusion of service providers and reduced tax rates.
  • This scheme is also applicable to the real estate sector with respect to under-construction, ready and affordable homes.
  • The composition scheme is an alternative method of tax levy under GST designed to simplify compliance and reduce compliance costs for small taxpayers.
  • The main feature of this scheme is that the business or person who has opted to pay tax under this scheme can pay tax at a flat %age of turnovers every quarter, instead of paying tax at a normal rate every month.

Eligibility

  • The composition scheme is applicable to manufacturers or traders whose taxable business turnover is up to ₹1.5 crore (₹75 lakh in case of North-Eastern States).
  • A service provider can opt for the scheme if his taxable turnover is up to ₹50 lakh.
  • Businesses with inter-State supplies, manufacturers of ice cream, pan masala and tobacco, and e-commerce players cannot opt for the composition scheme.

Importance

  • The composition scheme effectively acknowledges the importance of the MSME sector, by granting relief to it on GST filings, procedures and tax rates.
COMPOSITION TAXPAYER economy