Finance

Manufacturers Under Composition Scheme To Pay 1% GST

The government has reported that they have lowered the GST rates by 1% for the manufacturers who have chosen the composition scheme. The government has the same easier norms for traders who are still opting for it. The finance ministry in November 2017 has also informed the changes decided by the Goods and Services Tax Council, which is chaired by the Union Finance Minister, Mr. Arun Jaitley and included state counterparts. The notice instructs that the manufacturers who have opted for composition scheme will now have to pay 1% Goods and Services Tax or GST as against 2% earlier.

Manufacturers Under Composition Scheme To Pay 1% GST

In addition, traders who are now opting for composition scheme would have to pay the tax at 1% on their revenue of taxable goods. So far, these traders were paying GST on total turnover that included turnover from exempt supplies like fruits and vegetables. There are around 90 lakh businesses, which are registered under GST and over 15 lakh organizations opted for composition scheme that allows them to pay taxes at a minimal rate and therefore makes compliance easy under the Goods and Services Tax, which was rolled out from July 1.

Though a regular taxpayer must pay taxes monthly, a composition trader is required to file only one return and pay taxes quarterly and they are not required to keep detailed records as compared to a normal taxpayer who maintains detailed records. This is open for manufacturers, restaurants and traders whose turnover does not exceed Rs. 1.5 crores.

The GST council in its November meeting has increased the composition scheme to Rs. 1.5 crores and decided to alter the GST law to raise the statutory threshold to Rs. 2 crores. Abhishek Jain of India Tax Partner said that this will make the composition scheme under GST more striking.