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GST Composition Benefit not available if Turnover exceeds Rs. 5 Lakh or 10% of Turnover in State: AAR [Read Order]

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The Karnataka Authority of Advance Ruling (AAR) ruled that the applicant is eligible for composition scheme under Section 10 of Central Goods and Service Tax (CGST) Act, 2017 if the turnover services of the applicant does not exceed the 10% of turnover in a state or union territory in the preceding financial year or for 5 lakh rupees, whichever is higher.

The applicant, Ghalib Iqbal Sheriff is a proprietor of M/s Empathic Trading Centre engaged in the business of supplying goods under the trade name ‘Empathic Trading Centre’ and is also a supplier of service of renting immovable property.

The applicant sought the advance ruling on the issue of whether the applicant is eligible for a composition scheme under Section 10 of Central Goods and Service Tax (CGST) Act, 2017 when his aggregate turnover is INR 50,00,000/-.

The authority consisting of members Dr. M.P. Ravi Prasad and Mashood Ur Rehman Farooqui ruled that the applicant is eligible for composition scheme under Section 10 of Central Goods and Service Tax (CGST) Act, 2017 if the turnover services of the applicant do not exceed the 10% of turnover in a state or union territory in the preceding financial year or for 5 lakh rupees, whichever is higher.

“The applicant is not eligible to opt to pay tax under the notification dated March 7, 2019, of the government of Karnataka as the applicant is registered as a composition taxpayer. The rate of tax applicable on entire value is 3% CGST and 3% KGST and he cannot pay tax at 1% on supply of goods and 6% tax on the supply of services,” the authority said.

To Read the full text of the Order CLICK HERE
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