Introduction
Composition Scheme is a scheme introduced in order to benefit small taxpayers. This scheme is applicable to businesses whose annual aggregate turnover in the previous year does not exceed 1.5 Crores. Taxpayers under the composition scheme have a few advantages of lower tax rates and lesser compliances but also have a few disadvantages like being unable to claim Input tax credits and being barred from carrying out inter-state transactions.
On 4th August 2023, CBIC came up with some important notifications in regard to Composition Tax Payers and Unregistered persons, which shall come into force with effect from 1st day of October, 2023
Notification No. 36/2023
(Notification shall come into force with effect from 1st day of October, 2023)
This notification was in relation to the sales by composite tax payers on various E-commerce platforms and the laying the instructions for the respective E-commerce operators regarding the same. The article further explains the notifications relating to the composition levy.
In relation to section 148 a notification is passed for the E commerce operators. The same states that the E commerce operators to collect tax at source under section 52 with respect to supply of goods and services made by tax payers under Section 10.
Restriction:
Further the notification specifies the conditions for composite tax payers. Although composite tax payers can supply their goods or services or both through the ecommerce platforms, the ecommerce operators cannot allow any inter-state supplies.
Tax collected at source:
The ecommerce operator should collect tax at source and pay the same to the government as per Section 52 (3). This TCS can be further utilized by the e-commerce operators to pay their output tax liability
Reporting:
The e-commerce operators have to report the supplies through composition tax payers in GSTR 8 on the online portal.
Date of enforcement:
The notification comes to force from 1st October 2023 further which the composite tax payers and e commerce operators have to comply accordingly.
Notification No. 37/2023
(Notification shall come into force with effect from 1st day of October, 2023)
On the same date, another notification was issued relating to the same sections which states the following. This notification was in relation to supply by unregistered persons supplying through e-commerce platforms. In addition to the previous notification further conditions are prescribed as follows.
Restriction:
According to the notification issued, E commerce operator cannot allow Unregistered Tax Payer to supply through E commerce operator if:
- Enrolment number has not been allotted
- If the Unregistered Tax Payer carries out inter-state supplies.
Tax Collected at source:
E-commerce operators are not allowed to collect tax at source in for supplies made by unregistered person. For unregistered person, this exemption simplifies the tax collection procedure.
Reporting:
The e-commerce operators have to report the supplies through composition tax payers in GSTR 8 on the online portal.
Authors:
Vaishvi Parekh
Associate Consultant | Email: vaishvi.parekh@masd.co.in