Voluntary GST Registration
A person who is not mandatorily required to take Goods and Services (GST) registration as prescribed can take registration voluntarily and file the returns accordingly. That means Small businesses with turnover less than 20 lakhs /40 lakhs who are not covered under mandatory category for GST registration can voluntarily register under GST. That gives you all GST benefits and comply with all the GST Regulations.
Input Tax Credit
Input Tax Credit or ITC is the tax that a supplier pays on a purchase of such goods and services that are used in business and that can reduce tax liability of supplier when supplier makes a sale of finished goods and services. In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases of Inputs used to make taxable supply of Goods and Services. Supplier can get Input Tax Credit (ITC) only for those goods used in business to make taxable supplies that means supplier cannot take credit of:
- Personal use
- Exempt supply
- Supplies on which credit specifically not provided by the Act
Registration under Composition scheme
Taxpayer having turnover is below Rs 1.5 crore can opt for Composition Scheme. Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be availed by any taxpayer whose turnover is less than Rs. 1.5 crore. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh.
Person that cannot opt for the composition scheme:
- Manufacturer of ice cream, pan masala, or tobacco
- A person making inter-state supplies
- A casual taxable person or a non-resident taxable person
- Businesses which supply goods through an e-commerce operator
Taxpayers registered under composition schemes have to pay a nominal amount of GST and cannot take credit of input tax paid on purchase of goods and services.
Condition of Composition scheme:
- The dealer cannot supply GST exempted goods
- The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
- No Input Tax Credit can be claimed by a dealer opting for composition scheme
- The taxpayer has to mention the words "composition taxable person" on every notice or signboard displayed prominently at their place of business and on every bill of supply issued by him.
- If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
Reverse charge mechanism:
Reverse charge is a mechanism under which the recipient of the goods or services is liable to pay the tax instead of the provider of the goods and services that means under reverse charge mechanism (RCM), liability to pay tax shifts from supplier to recipient.
Services liable for Reverse charge provided by:
- Any person who is located in a non-taxable territory
- Goods Transport Agency (GTA)
- An individual advocate or firm of advocates
- Government or local authority
- Sponsorship services
- Author or music composer, photographer, artist, etc
Central Government by its notification notified such goods and services liable for reverse charge
Penalty for not registering under GST
An offender not paying tax or making short payments has to pay a penalty of 10% of the tax amount due subject to a minimum of Rs.10000.
The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes
