Regarding compostions scheme
This query is : Resolved
03 January 2014
Dear Sir, I have the following query:
1. What is the turnover limit in Karnataka for hoteliers under composition & Rate of Tax in Composition?
2. If Turnover is crossing limit and what is Rate of Tax, Wheather it come under CAT or Cot
3.The tax is calculated on the total turnover, do we need to add purchases from URD which includes vegetable, meat, poultry, dairy products and other food products used in a restaurant.
4. In case there is calculation worksheet with delayed interest and penalty, I would be thankful if mailed.
1. What is the turnover limit in Karnataka for hoteliers under composition & Rate of Tax in Composition?
2. If Turnover is crossing limit and what is Rate of Tax, Wheather it come under CAT or Cot
3.The tax is calculated on the total turnover, do we need to add purchases from URD which includes vegetable, meat, poultry, dairy products and other food products used in a restaurant.
4. In case there is calculation worksheet with delayed interest and penalty, I would be thankful if mailed.
20 July 2025
Regarding your queries on Composition Scheme for Hoteliers in Karnataka:
Turnover Limit for Hoteliers under Composition in Karnataka:
The turnover limit for composition scheme generally aligns with the threshold prescribed under the Karnataka VAT rules.
As of the latest applicable rules around that time (2014), the composition scheme was available for dealers with turnover up to Rs. 1.5 Crores (subject to updates, so please cross-check with latest notifications).
Hoteliers with turnover up to this limit could opt for composition.
Rate of Tax under Composition for Hoteliers:
For composition dealers (including hoteliers), the rate is generally a fixed percentage on turnover which is lower than the normal VAT rate.
The exact rate for hoteliers may vary, commonly around 1% to 5% depending on category (5-star, 3-star, etc.).
If turnover crosses the prescribed limit, the dealer must register under regular VAT (either Category Tax - CAT or Commercial Tax - COT, depending on turnover and classification).
Treatment of Purchases from URD (Unregistered Dealers):
In VAT, tax is charged on sales turnover, not on purchases.
For composition tax calculation, tax is applied on total turnover of sales.
Purchases from URD (vegetables, meat, poultry, dairy products) are not added to turnover for tax calculation.
However, input tax credit is generally not allowed under composition scheme, so these purchases are just part of cost, not turnover.
Calculation Worksheet for Delayed Interest and Penalty:
I can provide a sample template to calculate interest and penalty on delayed VAT payments.
Interest is usually calculated on the outstanding tax amount from the due date until payment.
Penalty is generally a fixed percentage or a fixed amount based on delay.
Would you like me to draft a simple Excel worksheet or formula template for interest and penalty calculation? Also, please confirm if you want the most recent updated rules or from a specific year.
Turnover Limit for Hoteliers under Composition in Karnataka:
The turnover limit for composition scheme generally aligns with the threshold prescribed under the Karnataka VAT rules.
As of the latest applicable rules around that time (2014), the composition scheme was available for dealers with turnover up to Rs. 1.5 Crores (subject to updates, so please cross-check with latest notifications).
Hoteliers with turnover up to this limit could opt for composition.
Rate of Tax under Composition for Hoteliers:
For composition dealers (including hoteliers), the rate is generally a fixed percentage on turnover which is lower than the normal VAT rate.
The exact rate for hoteliers may vary, commonly around 1% to 5% depending on category (5-star, 3-star, etc.).
If turnover crosses the prescribed limit, the dealer must register under regular VAT (either Category Tax - CAT or Commercial Tax - COT, depending on turnover and classification).
Treatment of Purchases from URD (Unregistered Dealers):
In VAT, tax is charged on sales turnover, not on purchases.
For composition tax calculation, tax is applied on total turnover of sales.
Purchases from URD (vegetables, meat, poultry, dairy products) are not added to turnover for tax calculation.
However, input tax credit is generally not allowed under composition scheme, so these purchases are just part of cost, not turnover.
Calculation Worksheet for Delayed Interest and Penalty:
I can provide a sample template to calculate interest and penalty on delayed VAT payments.
Interest is usually calculated on the outstanding tax amount from the due date until payment.
Penalty is generally a fixed percentage or a fixed amount based on delay.
Would you like me to draft a simple Excel worksheet or formula template for interest and penalty calculation? Also, please confirm if you want the most recent updated rules or from a specific year.
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