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Even as total GST collections for the month of December came in at higher than expected Rs. 86,703 crore, the composition scheme under GST seems to be not working well as the figures for the quarter July-September 2017, shows only Rs 335.86 crore being collected.
“For the composition dealers, for quarter July-September 2017, the last date of filing GSTR 4 Return was 24 December, 2017. A total of 8.10 lakh returns were filed by Composition Dealers paying a total of Rs. 335.86 crores as GST,” said Ministry of Finance in a tweet.
After the recent GST Council meeting on January 18, 2018 Finance Minister Arun Jaitley said the compensation scheme was discussed at length and that collections were low. “Out of the 17 lakh dealers who have registered themselves under the scheme at 1% rate, the collection for the first quarter has only been around Rs 307 crore. The scheme has not been enthusiastically responded to,” Jaitley was quoted after the GST council meet.
Final figures released by Ministry of Finance shows one crore taxpayers have been registered under GST so far till January 24, 2018 of which 17.11 lakh are Composition Dealers which are required to file returns every quarter. The Ministry added that 56.30 lakh GSTR 3B returns have been filed for the month of December, 2017 till January 24, 2018.
Jaitley had added that in fact most of the people who have opted for composition are below Rs 20 lakh in turnover and it seems there are cases of under-declaration under the scheme. The FM had said there may be a case to re-introduce Reverse Charge Mechanism (RCM) under Section 9(4) only for those who opt for Composition Scheme.
The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 1.5 crore and pays a flat rate of tax regardless of what they manufacture, provide as a service or trade they carry on. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.
Currently, it is at 1% (0.5% Central tax plus 0.5% State tax) on composition scheme for dealers and manufacturers. Manufacturers under this scheme before October 2017, paid 2% ( 1% Central tax plus 1% State tax) of the turnover. Restaurant Services pay 5% (2.5% Central tax plus 2.5% SGST) of the turnover and this remained unchanged even after the tweaks the law saw in October 2017.