Frequently Asked Questions

Find the answers to the most commonly asked questions about our services below

What is Goods and Service Tax (GST)?

It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

What exactly is the concept of destination based tax on consumption?

The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

What type of GST is proposed to be implemented?

It would be a dual GST with the Centre and States simultaneously levying it on a common tax base. The GST to be levied by the Centre on intra-State supply of goods and / or services would be called the Central GST (CGST) and that to be levied by the States would be called the State GST (SGST). Similarly Integrated GST (IGST) will be levied and administered by Centre on every inter-state supply of goods and services.

Why is Dual GST required?

India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.

What is the specified rate of composition levy?

S. No.Registered PersonRate of tax
1Manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobacco products etc.)2% ( 1% Central tax plus 1% State tax) of the turnover
2Restaurant Services5% ( 2.5% Central tax plus 2.5% SGST) of the turnover
3Traders or any other supplier eligible for composition levy1% ( 0.5% Central tax plus 0.5% State tax) of the turnover

What is the difference between Composite Supply and Composition Scheme?

The Composition Scheme under GST is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 lakhs (Rs. 50 lakhs in case of few states)

Composite Supply means a bundled supply of 2 or more goods & services which are supplied together in the ordinary course of business, out of which one is a principle supply. Example: A family booked a tour package from tourism department, the package includes guide services, to and fro return train tickets, and stay in a budget hotel, car for local sightseeing, breakfast, and Insurance.

Which are the Special Category States in which the turnover limit for Composition Levy is Rs. 50 lakhs?

Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh

I am a trader from Mumbai selling Fruits & Vegetables. My turnover is 65 lakh I also distribute Guava to Delhi, Kolkata, Bangalore, Chennai and Vijayawada. Do I need to register under GST? Can I opt for Composition Scheme?

No ,fresh Fruits & Vegetables goods are exempted under GST and no need to register even though the turnover crosses 20 lakh and the question of Composition Scheme under GST would not arise.

When is registration in another state required? I am providing Online tutor services from Bangalore to colleges in Hyderabad, Telangana. Should I have to register in Telangana? Can I opt for Composition Scheme?

If services are provided from Bangalore then registration is required to be taken only in Karnataka and IGST has to be paid on interstate supply of services. Composition Scheme is applicable only on Restaurant/Caterer services & not on Consultancy services. Further Interstate supplies are not permitted under Composition Scheme.

My turnover is 50 lakhs, I am manufacturing inner tubes in bicycles at Chennai & I am currently paying 5% GST.Can I opt for Composition Scheme?

Yes, the turnover limit for Composition Scheme for manufactures other than tobacco products, is 75 lakh for Chennai and Composition Scheme can be availed. The GST rate is 2% of turnover under the Composition Scheme.

I am a Cochin based retailer selling FMCG products and I have opted for Composition Scheme. I have paid Input GST on my purchases to an amount of Rs.45,000.How to claim Input Tax Credit?

No Input Tax Credit can be availed by the Composition Dealer as no GST is charged from the consumer and GST is paid on turnover at a rate of 1% and the facility of quarterly returns can be availed.

Can you tell about the return filing process under Composition Scheme?

Such persons need to electronically file quarterly returns in Form GSTR-4 on the GSTN common portal by the 18thof the month succeeding the quarter. For example return in respect of supplies made during July, 2017 to September, 2017 is required to be filed by 18th October, 2017.

I opted for composition scheme in July in Delhi. Suppose during the financial year the turnover crosses Rs.75 lakhs? Can I continue under composition scheme for rest of the year i.e. till 31/03/2018?

No. The option to pay tax under composition scheme lapses from the day on which the aggregate turnover during the financial year exceeds the specified limit (Rs. 75 lakhs). Hence it is required to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed. However, you shall be allowed to avail the input tax credit in respect of the stock of inputs and inputs contained in semi-finished or finished goods held in stock and on capital goods held by him on the date of withdrawal and furnish a statement within 30 days of withdrawal containing the details of such stock held in FORM GST ITC-01.

A person opting to pay tax under the composition scheme receives inputs/input services from an unregistered person. Will the composition taxpayer have to pay GST under reverse charge? If yes, in what manner?

Yes. Tax will have to be paid on such supplies by the composition taxpayer under reverse charge mechanism. The tax can be paid by the 18thday of the month succeeding the quarter in which such supplies were received. The information relating to such supplies should be shown by the composition taxpayer in Table 4 of return in FORM GSTR -4.

What are the compliances from ITC reversal point of view that need to be made by a person opting for composition levy?

The registered person opting to pay tax under composition scheme is required to pay an amount equal to the input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of exercise of option. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs. In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as 5 years.

Assume capital goods have been in use for 4 years, 6 months and 15 days. The useful remaining life in months will be 5 months ignoring the part of the month. If ITC on such capital goods is taken as C, ITC attributable to the remaining useful life will be C multiplied by 5/60.

This would be the amount payable on capital goods. The ITC amount shall be determined separately for integrated tax, central tax and state tax/Union territory tax.

The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the said ledger, or by debiting electronic cash ledger. The balance, if any in the electronic credit ledger would lapse. Such persons also have to furnish the statement in FORM GST ITC-03 which is a declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under Section 18(4) of the CGST Act, 2017 within a period of sixty days from the commencement of the relevant financial year.

Can a person paying tax under composition levy, withdraw voluntarily from the scheme? If so, how?

Yes. The registered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. Every person who has filed an application for withdrawal from the composition scheme, may electronically furnish, a statement in FORM GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date of withdrawal, within a period of thirty days of withdrawal.