Amendments to the Composition Scheme Notification u/s 42
Notification No. VAT-1505/ CR-105 /Taxation-1 dated 1st June 2005, issued IV s 42 provides for composition schemes for restaurants, bakers, retailers and second hand motor vehicle dealers. Certain amendments have been made, w.e.f. 1st April 2016, by notification dated 0th arch 2015 [Notification No. VAT-1516/ CR-51/ Taxation-1] to the said notification. The amendments are explained as follows:
A. Restaurant composition scheme-revision in rates:
Up to 31st March 2016, the composition amount rates for a restaurant, eating house etc. was 5% in case of a registered dealer and 10% in case of an unregistered dealer. These rates were irrespective of the turnover of sales of food and non-alcoholic drinks of the composition dealer.
From 1st April 2016, the composition amount rates have been linked with such turnover of sales of the registered dealer for the previous year.
A dealer (RD), whose turnover of sales of food and non-alcoholic drinks in the previous year, to which he desires to opt for the Composition Scheme, is Rs. 3 crore or below would be liable to pay composition amount at the rate of 5% of such turnover.
A dealer (RD), whose turnover of such sales, in the previous year, exceeds Rs. 3 crore would be liable to pay composition amount at the rate of 8%.
The composition amount rate, in case of an unregistered dealer continues to be 10%.
It is clarified that:
- a) For the purpose of computing the above referred turnover limits, the turnover of sales of food and non-alcoholic drinks shall only be taken into consideration.
- b) Secondly, the composition amount rates of 5%, 8% and 10% are applicable to the turnover of sales of foods and non-alcoholic drinks.
- c) The scheme of taxation of liquor, in case of a dealer, who also serves alcoholic drinks, remains same.
- d) In case, any dealer desires to opt in or opt out of the Composition Scheme, then he may opt in or out by making an application to the Joint Commissioner of the concerned Nodal Division or VAT Administration. A dealer desiring to opt out or opt in may apply on or before 15th May 2016.
- e) The dealer who opts out or, as the case may be, ceases to be eligible for the composition scheme, may claim set-off in his first return as a non-composition dealer, after opting out of composition scheme on the purchases of goods which are held in stock on the date of opting out of the composition scheme and on which he had not claimed set-off earlier.
- f) The dealer opting for the composition scheme under this notification shall reverse the set-off, claimed by him on the purchase of goods which are held in the stock on the date of opting for the composition scheme. Such amount of set-off shall be paid by him along with his first return of composition scheme, after opting for the composition scheme.
B. Baker Composition Scheme:
A baker, registered under VAT Act, who opts for the baker Composition Scheme was required to pay composition amount of 4% on the turnover of sales of all bakery products, including bread in loaf, rolls or in slices, toasted or otherwise. The composition rate for the URD baker was 6% of such turnover. The bread, mentioned above (except pizza bread), is tax free, being covered by Sch. entry A-7. The deduction of these tax free goods was not available for the purpose of payment of composition amount.
From 1st April 2016, a baker (both RD and URD), who has opted for the composition scheme becomes eligible to deduct the turnover of sales of such bread, while making the payment of composition amount.
The condition regarding turnover limit for the Baker Composition Scheme remains same at Rs. 50 lakh.
C. Retailer Composition Scheme:
A simplified composition scheme for retailers has been introduced from 1st October 2014. A detailed Trade Circular has been issued on 20th September 2014 to explain the features of the said scheme. (Trade Cir. No.17T of 2014]
A dealer, whose turnover of sales during the previous year is upto Rs. 50 lakh was eligible to opt for this composition scheme.
Now, this turnover limit has been increased to Rs. 1 crore. Therefore, from 1st April 2016, a dealer, whose turnover of sales in the previous year is up to Rs. 1 crore would be eligible for the Retailer Composition Scheme.
A dealer, who has not opted for this composition but who desires to opt for this composition scheme would be required to upload an application in Form 4A on the Department’s website on or before 30th April 2016. A retailer, who had already opted for this Composition Scheme need not apply in order to continue in the scheme even if his turnover of sales may have exceeded Rs. 50 lakh but is up to Rs. 1 crore in the previous year.
Earlier, Retailer Composition dealer was required to file six-monthly returns, as stipulated in condition no. (vi) of entry 3 of the said notification dated 21st August 2014. Now, from 1st April 2016 such Retailer Composition dealers shall file returns, as per the provisions of rule, applicable to any other non-composition dealer.
D. Application for composition scheme:
As the Trade is aware, the Sales Tax Department has been restructured/For details see Trade Cir. No. 20T of 2015 dated 31s, Dec, 2015]. In view of this restructuring, instead of the functional divisions in Mumbai and Pune, Nodal Divisions have been formed, which are headed by the Joint Commissioner of Sales Tax. In rest of Maharashtra, the concerned Joint Commissioner continues to head the Division.
It is clarified that an application for composition shall be made by a dealer in Mumbai and Pune to the Joint Commissioner of the concerned Nodal Division. Rest of the dealers in the State shall make an application to the Joint Commissioner (VAT Administration), concerned, as earlier. Of course, a retailer, who desires to opt in or opt out of the Retailer Composition Scheme is required to upload application in Form 4A or Form 4B, respectively on the Department’s website.
Amendment to Schedule of Entry Tax on Goods Act
Tiles of marble and granite were liable to Entry Tax under entry 15 of the Entry Tax at 12.5%. Nov, the said entry has been amended to include slabs of marble and granite also. Therefore, entry of slabs of marble and granite shall be liable to entry tax at the rate of 12.5% w.e.f. 1st April 2016.
- You are requested to bring the contents of this circular to the notice of all the members of your association.
Commissioner of Sales Tax,
——————————– Mumbai Dt: 22/04/2016
Trade Cir. 09 T of 2016
Copy forwarded to the Joint Commissioner of Sales Tax (Mahavikas) with a request to upload this Trade Circular on the Departments web-site.
Joint Commissioner of Sates Tax (HQ)1,
Maharashtra State, Mumbai.