GST: Government May Reopen Composition Scheme Window For Small Businesses

The government is considering to re-open the composition scheme window that allows small taxpayers to pay levies at a lower rate by foregoing the benefit of input tax credit under the Goods and Services Tax, a senior government official told BloombergQuint.

The proposal is likely to be tabled in GST Council’s next meeting on September 9, the official said requesting anonymity. According to the scheme, traders, manufacturers and restaurant owners with annual turnover up to Rs 75 lakh in the preceding financial year, can pay tax at 1 percent, 2 percent and 5 percent, respectively. Those availing the scheme will not get the benefit of input tax credit.

The government is planning to make the scheme available again for those small taxpayers who have registered but not availed the scheme, the official cited above said. There are many taxpayers who are yet to successfully complete their registration process, and they will also get a chance to avail the composition scheme if it’s extended, he said.

Former GST Network Chairman Navin Kumar had earlier told BloombergQuint that around 9.8 lakh taxpayers had opted for the scheme.

Of the total 72.33 lakh taxpayers, 58.53 lakh have completely migrated to the GSTN and 13.8 lakh are yet to complete procedural formalities, the finance ministry had said while disclosing GST collections for July.

For the taxpayers based in special category states like Arunachal Pradesh, Assam, Manipur and Himachal Pradesh annual turnover should be up to Rs 50 lakh to avail the composition scheme, according to a decision taken by the GST Council.

As many taxpayers are yet to successfully complete the registration process, many of them could not avail the composition scheme. The government is likely to give them another chance by reopening the facility, Abhishek Jain, partner-indirect tax at EY India, told BloombergQuint.