The Central Board of Indirect Taxes (CBIC) has notified a New Scheme in GST vide Notification No. 2/2019 Central Tax (Rate), dated March 7, 2019 in which a taxpayer has been allowed to pay GST on a presumptive basis at the rate of 6% (3% CGST and 3% SGST/UTGST).
It is a new scheme (hereinafter referred to as ‘Presumptive Scheme’). The primary reason for not considering this as a composition scheme is that the relevant notification does not refer to Section 10 of the CGST Act, 2017 which is the enabling provision for the composition levy.
This new scheme has been introduced by the CBIC by exercising the powers granted to it under Section 9 (Levy and Collection), Section 11 (Power to grant exemption from tax) and Section 16 (Eligibility and condition for taking input tax credit) of the CGST Act, 2017.
The reference to Section 10 of the said Act is completely missing in the notification. Consequently, it has been inferred that this ‘Presumptive Scheme’ is similar to the existing composition scheme but is not a composition scheme.
The salient features of this scheme are as below:
* It is a new scheme in which a taxpayer has been allowed to pay GST on a presumptive basis at the rate of 6% (3% CGST and 3% SGST/UTGST).
* This new scheme has been introduced by the CBIC (Central Board of Indirect Taxes and Customs).
* Consequently, it has been inferred that this ‘Presumptive Scheme’ is similar to the existing composition scheme but is not a composition scheme.
* This scheme can be taken by eligible registered persons on or after April 1, 2019.
* Only in respect of Intra-State supplies of goods or services or both the benefit under this scheme can be taken.
Eligibility for the Scheme:
A registered person can claim the benefit of this presumptive scheme provided it complies with the following conditions:
(a) His turnover in the preceding financial year does not exceed Rs. 50 lakhs. Thus, the suppliers intending to opt for this scheme in the Financial Year 2019-20 should not have the turnover of more than Rs. 50 lakhs during the Financial Year 2018-19. That turnover limit of Rs. 50 lakhs shall be calculated on PAN basis.
(b) He is not eligible to pay tax under composition scheme governed by Section 10 of the CGST Act.
(c) He is not engaged in the business of making any supplies on which GST is not leviable under this Act (i.e., Petro Products or Alcoholic liquor).
(d) He is not engaged in the business of supply of ice cream and other edible ice (HSN 21050000) or pan masala (21069020) or tobacco and manufactured tobacco substitutes (HSN Chapter 24) (e) He is not making any Inter-State outward supplies.
(f) He is neither a casual taxable person nor a non-resident taxable person.
(g) He is not making any supply through an e-commerce operator (ECO) on which TCS applies.
Rate of Tax:
If the registered person is eligible to take the benefit of this scheme, he shall pay GST at the rate of 6% (3% CGST and 3% SGST/UTGST) on his total supply up to Rs. 50 lakhs. If turnover from goods or services or both (mixed supplies) during the current year exceeds this limit, he shall continue to be eligible to avail of this scheme in that year.
However, the benefit of concessional tax shall be available on the turnover of the first Rs. 50 lakhs and the turnover which exceeds this limit shall be subject to GST as per the applicable rates.
The supplier opting for this scheme shall pay GST at the rate of 6% on all supplies made by him, irrespective of the fact whether such supply is exempt from tax or has different tax rates.
For payment of tax, he is not allowed to claim the credit of taxes paid for inputs, input services or capital goods so procured by him. Meaning thereby he shall be paying GST at the rate of 6% from his pocket.
Where a supplier has taken the GST registration for the first time, the presumptive tax at the rate of 6% shall be payable on the supplies made by him only after the date of registration.