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Entities Opting for Composition Can’t Levy GST, Must Declare So

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Eateries, shops need to put up display boards saying they have chosen low-tax scheme
Eateries and shops that opt for the low-tax composition scheme will have to prominently display a board stating this and can’t charge goods and services tax (GST) from customers. Small establishments in the Rs  20 lakh to Rs  75 lakh annual turnover range are eligible for composition scheme.
“They will need to upfront state that they are under the composition levy… They will not charge GST from customers,” said a government official. Composition scheme norms specify that the entity has to mention the words ‘composition taxable person, not eligible to collect tax on supplies’ at the top of the bill of supply. 
‘Composition taxable person’ has to be displayed prominently at all places of business.
“Since composition dealers are not allowed to collect GST from the customers, a display is needed for consumer's information and protection,” said Pratik Jain, leader, indirect tax, PwC. “In the case of a normal dealer, GST has to be mentioned on the invoice along with applicable HSN (Harmonized System Nomenclature) codes.”
The scheme for small traders, manufacturers and restaurants allows for a low, flat GST levy. Also, they don’t need to maintain extensive documentation. Those with a turnover from ? 20 lakh to Rs 75 lakh Rs 50 lakh in the case of special category states-can pay tax at a prescribed percentage of turnover every quarter instead of normal GST rates every three months. Businesses with a turnover up to Rs 20 lakh are exempt under GST. Those opting for the composition scheme won’t be eligible for input tax credit. Under the scheme, manufacturers need to pay 2% of turnover (1% central tax and 1% state tax), traders need to pay1% (0.5% central tax and 0.5% state tax) while restaurants face 5% tax (2.5% central and 2.5 % state tax). The composition levy saves small entities the hassle of audits and maintenance of books. The scheme is not open to those who deal in ice cream, pan masala and tobacco products. In services, only restaurants have the option.
The Economic Times, New Delhi, 12th July 2017

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