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GST Composition scheme - registered but turnover less than Rs. 20 lakhs

AmmA (-) (26 Points)

12 May 2020

Hi.

I am a service provider and in Oct 2019 had registered as a composition dealer before my turnover was Rs. 20 lakhs. Thereafter, I raised a few invoices (total turnover was still under Rs. 20 lakhs). After this, since I was able to recover GST from my clients, I opted out of composition scheme in Feb 2020 and moved to the regular scheme and raised invoices + GST (which was then duly paid/returns filed).

My question is - am I liable to pay GST under the composition scheme for invoices raised between Oct 19 and Jan 20 even before the turnover reached Rs. 20 lakhs?

Thanks in advance.

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4 Replies

Nadeem Shaikh (6 Points)
Replied 12 May 2020

Yes , as you registered for gst.

AmmA (-) (26 Points)
Replied 12 May 2020

Thanks for your response.

I understand this is the clear position if one is registered under as a regular service provider, given that GST is being recovered from end customers and therefore must be paid to the government. However, under the composition scheme, GST is borne by the service provider himself, out of his own funds and further no ITC is available - given this, would it really be correct to recover GST despite not crossing the minimum threshold? Would you be able to point to the relevant sections / any other material to help me understand this?

Thanks once again.

Piali Roy Chowdhury (605 Points)
Replied 12 May 2020

Once Registered under GST, you have to pay tax to the Government as per the GST Law ignoring what ever your Turnover is ( Even if your Turnover is Rs. 10 and raised only 1 invoice during the year, you have to pay GST ). Rs. 20 lakhs is the Turnover threshold limit. This figure states that whether we have to opt for GST Registration or not. Once Registered you have to pay tax and file all your GST Return and Statements timely whatever your Turnover is.

Now, the GST Act 2017 has given "TWO SCHEMES OF REGISTRATION" :

1). REGULAR SCHEME under Section 9.
2). COMPOSITION SCHEME under Section 10.

If you opt for the 1st Option :- You have to Collect Tax from your Customers and dispose GST accordingly and avail ITC subject to certain conditions.

If you opt for 2nd Option : You have to pay Tax out of "YOUR OWN POCKET" and not be eligible to claim any ITC and cannot collect tax from the customers by virtue of Section 10(4) of the CGST Act 2017.

Now coming to your questions :

1). You have to dispose Tax on " Bill of Supply " raised during October 2019 to January 2020 since you were "Registered" under the Composition Scheme.

2). There is a Provision under CGST Act 2017 which states that "A Person can Register himself under GST VOLUNTARILY even his Aggregate Turnover does not crosses the basic threshold limit" : SECTION 25(3) of the CGST Act 2017.

Therefore your Question "Would it really be correct to recover/pay GST despite not crossing the minimum threshold ???"

Answer : YES... Refer the Provision of Section 25(3) of the CGST Act 2017 and my above explanation Sir.

Hope you understood Sir...

Thank You...

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Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 12 May 2020

Composite dealer is also Registered dealer in GST & as per Section 10 of CGST act you are liable to pay tax on Turnover .

Note : As per Section 25(3) of CGST Act , all the provision of this act is also Applicable to person who has obtain the Registration voluntary.

1 Like