There are several confusions and myths going on around the country about the goods and services tax. However, businesses are taking help of tax professionals to understand the GST provision and to get support for their business data management. In fact, the Government organized certain workshops, trainings and seminars to educate people about the new taxation regime. Still business owners, taxpayers and MNCs are unclear about certain GST provisions, terms and procedures that they essentially need to understand for their business effectiveness, growth and future prosperity. In this post, we have listed the answers of the most frequently asked questions by the business personals. Take a look.
Q1. Is the Composition Scheme really effective?
Composition scheme is implemented especially for small business owners whose annual turnover is less than 75 lakhs. They can get themselves registered under the composition scheme and enjoy its benefits such as tax payment on a quarterly basis, do not have to generate invoices per month. Taxpayers registered into this scheme are not authorized to collect tax from their customers. The best part is that it is optional to register yourself into this scheme. To know more you must go through the authentic GST bill details.
Q2. Who can/cannot opt for GST composition Scheme?
Businesses dealing with the supplies of only goods can opt for the composition scheme whereas taxpayers who are involves in the supplies of inter-state transactions on reverse charge basis are not eligible to get registered into this scheme.
Q3. At what tax rate the Composition dealer has to pay the tax?
The rate of tax varies for different taxpayers registered under the composition scheme. A manufacturer has to pay the tax at the rate of 1%, a restaurant owner has to pay at the rate of 2.5 % and 0.5% for the other suppliers.
Q4. Can a Registered Taxpayer under the composition scheme avail ITC benefit?
No, a registered taxpayer under the composition scheme cannot avail the benefit of ITC. This is the only drawback of getting yourself registered under this scheme.
Q5. What do you mean by Destination-based taxation system under the GST?
Place of supply and place of consumption is used in a similar context. A destination based taxation system means if the supplies are done from one state to another then GST will be levied by the Government of state of consumption. That’s the reason it is referred to as the destination-based taxation system.
The Way Forward
There are still several questions that need to clear such as dual GST which means that state and central both will levy the tax which will be included under a single tax named as GST. It is important to have enough information about GST bill details before getting your business registered under any scheme of GST.