User:Chaitkrish

New Composition Scheme for Retailers under section 42 of the Maharashtra Value Added Tax Act, 2002.
Ref : 1)Notification No. VAT 1514/CR 58/Taxation-1 dated 21st August 2014 2) Notification No. VAT 1505 / CR-105/Taxation-1 dated 1st June 2005

Hon. Dy. Chief Minister, in his Budget Speech for the year 2014-15, had announced that Composition Scheme for retailers would be made simpler and more attractive. Accordingly, entry 3 in the notification dated 1st June 2005 has been substituted by notification No. VAT 1514/CR 58/Taxation-1 dated 21st August 2014. New entry 3 of this notification provides for a simpler and attractive Composition Scheme for retailers. The new retailer Composition Scheme shall be effective from 1st October 2014. Consequentially, the old retailer Composition Scheme shall expire on 30th September 2014. Salient features of the new Composition Scheme are explained below: Dealers under the old Composition Scheme are eligible to opt for the new Composition Scheme from 1st October 2014. To opt for the new Composition Scheme, uploading of Form 4A on the Department's website up to 31st October 2014 is mandatory.

If any old Composition Scheme dealer does not desire to opt for the new Composition Scheme from 1st October 2014, then he shall be required to discharge tax liability, as a non-composition Scheme dealer from 1st October 2014. He shall ﬁle six-monthly return for the period from 1st October 2014 to 31*“ March 2015.

Effective date for opting in : A dealer can opt for the new Composition Scheme with effect from 1st October 2014 or 1st April of any subsequent year.

Rate of composition amount:
Two options have been provided for payment of composition amount.

1) If a dealer opts to pay composition amount on the total turnover of sales, then he shall pay 1% on the entire turnover of sales, including tax-free goods.

2) On the other hand, if he opts to pay composition amount only on the turnover of sales of taxable goods, then composition amount shall be payable at 1.5% on such turnover of sales.

Conditions to be eligible for the new Composition Scheme:
Applicant dealer should be registered under the MVAT Act, 2002 during the period for which Composition Scheme is desired. Applicant dealer should be engaged in the business of reselling at retail. The term, “selling at retail” has been explained in section 42[(1)(b] of the MVAT Act. A dealer shall be considered to be engaged in the business of selling at retail if 9/ 10th of his turnover of sales consists of sales made to persons, who are not dealers. The claimant dealer should not be a manufacturer or an importer. It is clariﬁed that if a dealer, who has already availed new Composition Scheme, imports any goods or manufactures any goods, he Would cease to be eligible, even though he may not have availed beneﬁt of composition for such imported or manufactured goods. The turnover of sales of goods shall not exceed rupees fifty lakh in the previous year, to which new Composition Scheme is desired. For instance, if a dealer desires to opt for new Composition Scheme from 1st April 2015, then his turnover of sales during the year 2014-15 should not have exceeded rupees ﬁfty lakh. Turnover of purchases is not relevant to decide eligibility of a dealer for Composition Scheme. Secondly, if turnover of sales of a Composition Scheme dealer exceeds rupees ﬁfty lakh in any year, then he can continue to avail benefits of Composition Scheme till the end of that year. However, he shall be ineligible for Composition Scheme in the subsequent year. For the purpose of computing turnover of sales and for availing benefit of Composition Scheme, turnover of sales of following goods shall not be considered:

Goods, covered by entry 5 and 10 of Schedule D of MVAT Act, i.e. High Speed Diesel Oil and any other kind of Motor Spirit. furnishing fabrics, notified by the State Government under entry 101 of Schedule C of MVAT Act. The turnover of sales of medicines would be eligible for the benefits of this Composition Scheme.

Other conditions to be complied by Composition Scheme dealer: Purchases: Taxable goods shall be purchased from registered dealers only. This condition is not applicable for purchase of tax- free goods and purchase of packing materials used for packing of goods, resold by him. Tax Collection: Composition amount shall not be collected separately by the Composition Scheme dealer. Tax Invoice: Tax invoice shall not be issued, in respect of sales for which Composition Scheme has been availed. However, as any other dealer, he is required to issue a cash memo, sales bill etc. if the value of the goods sold in a single transaction exceeds rupees ﬁfty. [sec. 86(3) proviso] Set-off: Composition Scheme dealer shall not be eligible to claim any set-off under MVAT Rules, 2005 in respect of purchase of goods, corresponding to sale of goods, for which composition has been availed. Set-off shall not be admissible on purchases of packing materials, used for packing of goods, for which Composition Scheme has been availed. It is clariﬁed that Composition Scheme dealer can claim set-off on purchases of capital assets and the purchase of goods, for which beneﬁt of composition has not been availed.

For any clarification please read the following Circular issued by Department of Sales Tax