FinMin Plans to Pre­vent Com­po­si­tion Deal­ers from Charg­ing GST from Buy­ers

The Economic Times - - Economy: Macro, Micro & More - Press Trust of In­dia

New Delhi: In a con­sumer-friendly move, the rev­enue depart­ment is plan­ning to make it manda­tory for com­po­si­tion deal­ers and ser­vice providers to de­clare their GST reg­is­tra­tion sta­tus in in­voices to en­sure that they do not charge any tax from buy­ers. The mea­sure, once im­ple­mented, would check the wide­spread prac­tice of com­po­si­tion deal­ers of charg­ing GST from pur­chasers and not de­posit­ing it with the ex­che­quer, an of­fi­cial said.

The rev­enue depart­ment is also plan­ning to launch a cam­paign to ed­u­cate con­sumers that the deal­ers opt­ing for com­po­si­tion scheme are not re­quired to charge the goods and ser­vices tax (GST) from pur­chasers, the of­fi­cial said. Un­der the GST com­po­si­tion scheme, traders and man­u­fac­tur­ers are re­quired to pay only 1 per cent GST on goods which oth­er­wise at­tract a higher levy of ei­ther 5, 12 or 18%. Such deal­ers are also not per­mit­ted to charge GST from the pur­chaser. Of the 1.17 crore busi­nesses reg­is­tered un­der GST, about 20 lakh have opted for com­po­si­tion scheme.

“It has come to the no­tice of the gov­ern­ment that a large num­ber of com­po­si­tion deal­ers are levy­ing GST at higher rates and not de­posit­ing it with the gov­ern­ment,” the of­fi­cial said.

Ac­cord­ing to the pro­posal be­ing con­sid­ered by the Cen­tral Board of In­di­rect Taxes and Cus­toms (CBIC), busi­nesses will have to manda­to­rily men­tion in the in­voice gen­er­ated by them that they are com­po­si­tion deal­ers and, hence, are not re­quired to charge GST.

“Si­mul­ta­ne­ously, we will ed­u­cate con­sumers that they should not pay GST while buy­ing goods from com­po­si­tion scheme deal­ers,” the of­fi­cial said.

To ease com­pli­ance bur­den for small busi­nesses, the GST law pro­vides for com­po­si­tion scheme un­der which traders and man­u­fac­tur­ers with an an­nual turnover of up to .₹ 1 crore can pay 1% GST. This thresh­old will in­crease to .₹ 1.5 crore from April 1.

Of the

1.17 crore busi­nesses reg­is­tered un­der GST, about 20 lakh have opted for com­po­si­tion scheme

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