Composition tax

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Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2014 Dear Sir,

In what circumstances the composition tax is preferable instead of VAT & why?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

02 July 2014 Generally for 'works contract'state government has given an option to pay VAT at compounded rate instead of paying at scheduled rate for the transfer of material embedded in the works contract. The determination of the value of such material is a cumbersome process and always debatable though there is a rule prescribed for the same. Therefore, government has introduced composition scheme to mitigate the hardship of dealers through which dealers are permitted to pay VAT ,at a rate lesser than the scheduled rate of material, on the entire value of the works contract.

Like wise , certain state has introduced composition scheme for gold & silver ornament dealers, granite metal crushing units , cooked food and beverages, for right to use of video cassette, medicine & drugs etc.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2014 Thanks a lot for your information sir

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