Composition Levy Up To 50 Lakhs Justifiable?


GST Payer
watch_later 3 years, 9 months ago

A tax payer with turnover less than 50 lakhs can opt for paying tax under composition levy scheme.

Whether turnover limit of 50 lakhs is reasonable?

I mean even under income tax audit is required if turnover cross 2 crore.

What you think whether turnover limit for composition levy is rightly capped at 50 lakhs or should be at 2 crores in line with income tax?

  • chatComments
1 Answer

Rahul Rai watch_later 3 years, 9 months ago
arrow_drop_up
2
arrow_drop_down

But under income tax the industry profit margin is required at 8% of gross turnover. So if you are making turnover of more than 50 lakhs say 1 crore, you profit will be at least 8 lakhs in a year.

A person with 8 lakhs in a year can afford a consultant to file returns etc.

Composition levy is for smaller entities who cannot afford the compliance cost.

However 8% is negligible and in reality profit margins are always at higher side and even you know how many people actually show all income under white income.

GST is perfect with exemption up to 20 lakhs and composition up to 50 lakhs.

Do not forget the advantages and disadvantages of composition scheme written by you.

The purpose of composition scheme is to provide relief to small traders from multiple monthly compliance such as return filings and monthly payments.

Even under current tax regimes such as VAT, only B2C dealers opted for composition scheme and under GST a B2B business will chose not to go under composition for obvious reasons.

  • chatComments
    Turnover limit is increased to 75 lakhs from 50 lakhs. - Pulkit Sharma
Did Not get Answer?

Join the largest Taxation Q&A platform on internet and ASK YOUR OWN question.

Ask your Question

You need to be logged in to answer.

Ask Question