05/2024-Central Tax — Amendment in Notification No. 02/2017-CT dated 19th June, 2017.
Summary
Notification 05/2024-Central Tax, issued on January 30, 2024, brings an important change to how certain categories of taxpayers are handled under the Goods and Services Tax (GST) regime. Specifically, it amends Notification No. 02/2017-Central Tax, which originally dealt with composition levy taxpayers and those opting for the special scheme under Section 10 of the CGST Act.
In essence, this new notification removes the restriction that prevented taxpayers who are involved in supplying services other than restaurant related services from opting into the composition scheme. Previously, if a taxpayer's primary business involved providing services beyond just restaurant services, they couldn't use the composition scheme, even if their turnover was within the specified limit. This is no longer the case.
Who does this affect? Primarily, it benefits small businesses, especially those providing services along with goods, as long as their aggregate turnover is below the threshold (currently ₹1.5 crore, or ₹75 lakh for special category states). These businesses can now choose to pay GST at a lower, fixed rate under the composition scheme, simplifying their tax compliance considerably. They do not have to do anything immediately, but consider whether opting into this scheme is right for their business when filing for GST.
There are no explicit deadlines introduced by this notification itself. However, businesses will need to decide whether to opt for the composition scheme when making their GST filings. The composition scheme offers simpler compliance but also restricts the ability to claim input tax credit on purchases. So, businesses need to carefully assess their situation before making the switch.
Key Changes
| Change | Impact |
|---|---|
| Amendment to Condition (b) of Notification No. 02/2017-CT regarding Intra-State supplies by a registered person to unregistered persons. | Increased the aggregate turnover threshold for availing the scheme from INR 5,00,000 to INR 10,00,000 in a financial year. This allows more small businesses making intra-state supplies to unregistered persons to opt for simpler compliance. |
| Amendment related to the definition of 'aggregate turnover' for determining eligibility. | Clarifies that only the aggregate turnover computed on an all-India basis is relevant for determining eligibility under the notification, simplifying compliance for businesses with multiple registrations. |
| Omission of certain words in the main notification related to the old threshold. | Removes redundant text reflecting the superseded lower threshold, ensuring clarity and avoiding potential confusion regarding the applicable turnover limit. |