GST

How does GST Revocation for composition Schemes work

GST was introduced with effect from 1st July 2017. The GST Council has been set up to decide the rate structure for different items under the GST regime.

Under the Composition Scheme, an individual or a company will not be required to pay tax on any benefit received by him/her or it from another person in relation to which he/she does not have any liability to pay tax and which is subject to deduction at source as per existing provisions of law.

In this article, we have mentioned how you can register for GST Revocation under the composition scheme. After you give the article you will know how to register for a competition scheme and also a loan whether or not you are eligible for it.

What is GST?

GST is a consumption tax that was introduced in India on 1 July 2017. The GST Council, headed by the Union Finance Minister and comprising all state finance ministers, sets the rates of taxes and levies them on goods and services. It also decides rules for determining which goods are subject to GST and how they should be taxed.

The GST Council has set four different tax slabs – 5%, 12%, 18%, and 28%. There is no standard rate across states, but most states have decided to implement a uniform rate of 18%.

The government claims that GST will lead to a uniform indirect tax system across all states in India. This will help in reducing corruption and avoid double taxation by making it easy for businesses to file returns and pay taxes in one place instead of multiple places. The government also claims that it will increase revenue collection by simplifying the process.

What Are Composition Schemes Under GST?

Composition schemes are the most important part of GST. This is because it will decide how much input tax credit you get on your output. The composition scheme will be based on the percentage of value addition to the final product, which means that if you have added 100% value to a product, you can claim a 100% input tax credit. If your output has only a 50% value addition and 50% input tax credit, then you can claim a 50% input tax credit.

The composition scheme also determines whether or not a good is zero-rated under GST (meaning no taxes are payable).

GST composition scheme is a tax rebate scheme where the taxpayer can claim back the GST paid on certain goods and services. This is done by submitting Form GST-1 to the appropriate authority. The form needs to be filled in with details of all taxable items purchased or used during a particular financial year.

GST Revocation for Composition Scheme Under GST

If a person decides to register under the composition scheme under GST and their registration is cancelled, they are not required to pay the taxes. 

GST revocation for the composition scheme will allow a business to avoid paying GST. If you want to cancel your registration, here are the steps that you must follow.

  • Go to the GST portal online  https://services.india.gov.in/service/detail/gst-registration-1 and select the option ‘cancellation of provisional registration.
  • A page will open. This is the cancellation page. Here your business name and GSTIN will appear automatically. 
  • You are required to mention the reason for the cancellation of GST.
  •  You will be asked for several author details related to GST and business. 
  • Fill up the required details and sign off. 
  • If you do not have tax invoices you can use this process but if you have tax invoices, form GST REG- 16 also needs to be filed.

GST revocation under the compositions scheme will be confirmed by the tax officer. However, if you do not meet the eligibility criteria this might be cancelled.

The CGST act mentions in section 29(5) that a person whose registration is cancelled has to pay an amount based on the taxable product or stock they own. 

Eligibility for Composition Scheme under GST

The compositions given to GST might be attractive and have a lot of benefits. But there are some rules to avail of this benefit. We have mentioned below the eligibility criteria to register for the GST revocation composition scheme.

  • If the turnover of a taxpayer is less than ₹1.5 crore, they are eligible to opt for the scheme. However, in the case of the North-Eastern states, the limit is less than ₹1.5 crores. In these places, if a taxpayer has an annual turnover of fewer than ₹75 lakhs, they are eligible for the scheme. 
  • The PAN Card details of the business would be taken into consideration before approving their registration under the composition scheme under GST.
  •  A person who is involved in the manufacturing process of items like ice cream, Pan Masala, or tobacco; cannot apply for the composition scheme under GST. 
  • Interstate suppliers are not eligible for this scheme.
  • Any company or business that uses E-Commerce operators to supply goods and not eligible to apply for the composition scheme under GST.

The online GST portal allows you to register with the composition scheme.  You can log in to the website and you will get the instructions to file CM P-02 on the online website.

The Benefits of Availing Composition Schemes Under GST?

The benefits of Composition schemes under GST are as follows:

  • It is a good tax-saving opportunity for small and medium-scale industries (SSI) to get the benefit of the composition scheme under GST. The scheme provides for exemption from payment of tax in respect of any taxable supply made by the person who receives such benefit.
  • Taxpayers can claim input credit in respect of any input tax paid on the purchase or production of goods or services by using a composition scheme, which will be available for 5 years from the date of payment till the expiry date. 

Conclusion 

GST is goods and service tax that is paid by taxpayers and businesses to the central government. This tax is a source of revenue for the Government and is used in funding public services. However, there are some schemes under which you can cancel the payment of GST. In this article, we mentioned all about GST revocation under the composition scheme.

If you wish to do a GST calculation for your business you can use the GST alculator by Vakilsearch. Vakilsearch has a team of expert lawyers and advisors who can help you make your GST registration process hassle-free and give 100% assistance.

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