GST Ki Master Class III - Composition and record keeping

GST Ki Master Class III
Composition and record keeping


This class is in two parts..
PART A-Composition Scheme
What is the composition scheme
Who is eligible to avail composition scheme
Category of persons excluded from the Scheme
Composition rates and computation of tax
Procedure to be followed

Part B- Accounts and records
Accounts and records to be maintained
Period for which to be retained

Part A              
Composition Scheme

Composition levy is an option for specified categories of small taxpayers to pay GST at a very low rate on the basis of turnover.
Advantages
  Low rate of tax
  Hassel free simple procedures  for such taxpayers
  Simple calculation of  tax based on turnover
  A very simple quarterly return

  Composition Scheme
The composition scheme is for
Manufacturers (other than few notified goods)
Traders of goods
Restaurants
having aggregate turnover of Rs 75 lakh in the previous financial year subject to certain conditions and restrictions

The aggregate turnover limit is Rs 50 lakh for following 9 states
Assam
Meghalaya
Manipur
Arunachal Pradesh
Mizoram
Tripura
Nagaland
Sikkim
Himachal Pradesh
Two special category states, Uttrakhand and J & K have opted for keeping the turnover limit as Rs 75 lakh

Aggregate turnover for determination of eligibility:
Total all India turnover of all units under same PAN.
It includes the value of exempt supplies and exports.
 It does not include the GST paid and the value of supplies received by a person on which he pays tax on reverse charge basis.

Composition Scheme if availed shall include all registered persons having same PAN
Composition scheme availability to a person shall lapse with effect from the date of his reaching the threshold turnover of seventy five lakh rupees.

Tax rates
Category of taxpayer - Rate
Manufacturer 2% (1% State tax and 1% Central tax)
Traders 1%
Restaurants 5%

Tax computation illustrated
Taxpayer ‘A’ is a manufacturer having one unit in U P and another in M P.  Total turnover of two units in last FY was Rs 55 lakh. Total turnover of two units in the first quarter of this year was Rs 20 Lakh

Unit	Location	Turnover in previous FY	Turnover in 2nd quarter of this FY	Total tax (@2%)
A1	U.P.	Rs 25 lakh	Rs 5 lakh	Rs 10,000
A2	M. P.	Rs 30 lakh	Rs 10 lakh	Rs 20,000
Aggregate  turnover		Rs 55 lakh	Rs 15 lakh

Supplier of services except restaurants
Any person who
makes (i) a supply of non-GST goods; or (ii) an inter-state supply; or (iii) a supply that attract TCS
is engaged in manufacture of goods, namely, ice cream, pan masala or tobacco and manufactured tobacco substitutes
Is a casual or a non-resident taxable person

If at the time of opting for scheme he has stock of goods purchased from unregistered person he will pay the tax on such goods
Not entitled to take ITC on inputs
Pay tax on inward supply from unregistered dealers
Pay tax on supply attracting reverse charge
Shall  not collect any amount as tax
Shall mention on bill of supply “Composition taxable person, not eligible to collect tax on supplies”
Shall mention “composition taxable person” on notice or sign board displayed at a prominent place at his place of businesses

Opting for composition scheme

Category of persons	How to exercise option	Effective date of composition levy
Persons migrated from central excise and VAT	Intimation in form CMP-01 & declare stock in CMP03	From beginning in GST
New registration under GST	Intimation in the registration form	From the effective date of registration
In other cases	Intimation in Form CMP-02	Beginning of the financial year

Return filing
Quarterly- by the 18th  of the month after the quarter
Opting out of composition scheme- Anytime at option
File an application if Form CMP-04

Register person is required to maintain records and accounts of
Production or manufacture of goods Supplies (inward/outward supply, supplier and recipient details, invoice, credit/debit note, delivery challan)
Stock ( receipt, used, lost, balance and location where goods are stored including in transit etc)
Input tax credit and use of inputs/input service
Output tax payable
Advance payments received and adjusted

Accounts and Records

Composition person to maintain simpler records
Warehouse/godown operator/transporter (even if not registered), to maintain record of consignor, consignee, movement, delivery, storage
Agent to maintain records  receipt and supply on behalf principal and records of authorization by the principal
A C&F agent or a carrier having custody of goods on behalf of a registered person shall maintain  details of goods handled by him.

Accounts and Records-requirements
It is sufficient (but not necessary) to maintain accounts and records in electronic form
Records can also be maintained manually – Such records are to be kept  and be accessible at related place of business.
Required to retained for six years from the due date of annual return
Commissioner may for a class of taxable persons
notify maintenance of additional documents
prescribes alternative documents, if such class is not able to maintain records as per the provisions of the Act.
 Separate records for works contract ( receipt /supply /payments etc.)
Production of records on demand

It is sufficient (but not necessary) to maintain accounts and records in electronic form
Records can also be maintained manually – Such records are to be kept  and be accessible at related place of business.
Required to retained for six years from the due date of annual return
Commissioner may for a class of taxable persons
notify maintenance of additional documents
prescribes alternative documents, if such class is not able to maintain records as per the provisions of the Act.
 Separate records for works contract ( receipt /supply /payments etc.)
Production of records on demand

Every taxable person having turnover exceeding prescribed limit shall get his account audited  by a chartered accountant or cost accountant (Prescribed limit at present is two crore rupees)
He shall  submit the copy of audited annual account  and a reconciliation statement.


Maintaining electronic records:
Are to be authenticated by digital signature
Maintained and preserved  in the manner that these can be restored within reasonable period in any circumstances
On demand to provide details, password, and explanation of codes used.

Thank You

The following material is available on www. cbec.gov.in
www.cbec-gst.gov.in
Presentation on GST
GST – Concept & Status
FAQs on GST in Hindi, English and 10 regional languages
CGST, UTGST, IGST & Compensation Acts
18 Rules
Constitutional Amendment Act