In order to provide relief and protection to the consumers, the revenue department is likely to mandate composition dealers and service providers to declare their goods and services tax (GST) registration status in invoices to ensure that they do not charge any tax from buyers. The move, once implemented, would check the widespread practice of composition dealers of charging GST from purchasers and not depositing it with the exchequer. The revenue department is also planning to launch a campaign to educate consumers that the dealers opting for composition scheme are not required to charge the GST from purchasers.
Under the GST composition scheme, traders and manufacturers are required to pay only 1 percent GST on goods which otherwise attract a higher levy of either 5, 12 or 18 percent. Such dealers are also not permitted to charge GST from the purchaser. There are over 1.17 crore businesses that have registered under GST and among these, among 20 lakh have opted for the composition scheme. It has come to the notice of the government that a large number of composition dealers are levying GST at higher rates and not depositing it with the government.
To ease the burden of compliance for small businesses, the GST law provides for composition scheme under which traders and manufacturers with an annual turnover of up to Rs 1 crore can pay 1 per cent GST. This threshold will increase to Rs 1.5 crore from April 1. Also, the GST Council, headed by Arun Jaitley and comprising state ministers, in its meeting on January 10 permitted service provider and those dealing in both goods and services with a turnover of Rs 50 lakh to opt for the GST composition scheme.