Decrease In Composition Turnover Limit for Uttarakhand

CBIC has recently issued Notification No. 14/2019- Central Tax; Dated: 7 March 2019 to give effect to the decision to increase turnover limit for composition scheme to Rs  1.5 crores. However for special category states including the state of Uttarakhand the limit has been kept at existing Rs 75 Lakh only.

Thus there would be two turnover thresholds for opting for composition levy

1) General Category States- Rs 1.5 crore

2) Special Category States- Rs 75 lakh

(Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand)

Composition Turnover Limit before 1 April 2019

Notification No.- 8/2017- Central Tax; Dated 27-06/2017 as amended by Notification No. 46/2017- Central Tax; Dated:13-10-2017, Notification No.- 1/2018- Central Tax; Dated: 1-01-2018, and Notification No.- 5/2019- Central Tax, Dated: 29/1/2019 provides turnover limit of Rs 1 crore to opt for composition levy.

For Special category states excluding Uttarakhand and Jammu and Kashmir turnover limit is Rs 75 Lakh.

Thus existing two turnover thresholds for opting for composition levy are

1) General Category States- Rs 1 crore (including Uttarakhand)

2) Special Category States- Rs 75 lakh (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh)

Notification No. 14/2019- CT supersedes earlier notification no.-8/2017- CT resulting in decrease of turnover limit for opting composition levy from earlier Rs 1 crore to Rs 75 Lakh in the state of Uttarakhand with effect from 1 April 2019. This will result in non-compliance and added tax burden on already struggling MSME sector in the state.

Turnover Limits applicable in various states for opting for composition can be summarized as under:

Government should clear its intentions on the above anomaly at the earliest to avoid  impacts on existing composition dealers in the state of Uttarakhand.