Finally, in a bid to get some relaxation out of multiple issues in GST, the GST council 25th meeting took some favourable decision for the taxpayers including composition dealers. The meeting approved some changes in the composition scheme which will further facilitate best of the supply chain and will make the tax evasion in check.
The latest changes incorporated will be enabling all the larger set of registered dealers to procure or purchase from the small composition scheme businessman and can avail input tax credit. This change being prosed was also stated by one of the officials.
Currently, small businessman which are up to a turnover of INR 1.5 crore can take the option to opt-in for the composition scheme where they can give a lower tax rate fixed by the council which will further help in lesser compliance burden. Under the composition tax scheme, the businessman has to pay 1% tax, manufacturers 2% and restaurants 5%.
The main disadvantage can be stated that the input tax credit cannot be availed by both the parties in the transaction also they are not allowed to invoke GST invoices which will further facilitate the buyers to avail input tax credit. According to the council decision, large registered taxpayers can pay the tax which is equal to the composition scheme tax rate on the purchases done by the small unregistered dealers.
The mechanism here is also known as to be the reverse charge mechanism enabling the buyers to avail the input tax credit. Also one must note that the composition scheme dealers are exempted from the paying the taxes on all the purchases done by the registered entities. The amendments will be required in the GST laws to further enable these suggested changes.
Give notification details sir.