Charging GST a no - go for Composition Dealers

Ever since Goods and Services Tax (GST) was introduced in India in 2017, there has been a huge hue and cry over the high rates. Giving in to industry and consumer demands, the government has been revising the tax slabs and providing relief to the traders and service providers.

 To ease compliance burden for small businesses, the GST law provides for composition scheme under which traders and manufacturers with an annual turnover of up to Rs 10 million can pay only 1% GST on goods which may otherwise attract a higher levy of either 5, 12 or 18 per cent generally. Such dealers are also not permitted to charge GST from the purchaser. Of the app. 12 million businesses registered under GST, about 2 million have opted for composition scheme. This monetary threshold will increase to Rs 15 million from April 1.

However, the government has noticed that a large number of composition dealers are levying GST at higher rates and not depositing it with the government. Therefore, the government is planning to make it mandatory for composition dealers and service providers to declare their GST registration status in invoices to ensure that they do not charge any tax from the buyers.

This proposal, upon implementation, would eradicate or at least reduce the widespread practice of composition dealers of charging GST from buyers, pocketing it themselves and not depositing it with the government.

A consumer information campaign is being planned to inform and educate buyers that the dealers opting for composition scheme are not required to charge GST from buyers, so that the buyers are diligent in this regard.

Hope the proposed measures will result in relief to the uninformed consumers and eradicate the menace of overcharging and undue enrichment of fraudulent dealers.

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