1. Stock in transition on July 1 not eligible for composition scheme

Stock in transition on July 1 not eligible for composition scheme

An entity that qualifies for composition scheme on all parameters but has stock in transition which is bought through inter-state purchase on July 1 will not be eligible for the scheme, revenue secretary Hasmukh Adhia clarified on Wednesday.

By: | New Delhi | Updated: July 13, 2017 6:57 AM
kh adhia, hasmukh adhia news, hasmukh adhia economy, indian economy, stocks, market Hasmukh Adhia (Express Photo)

An entity that qualifies for composition scheme on all parameters but has stock in transition which is bought through inter-state purchase on July 1 will not be eligible for the scheme, revenue secretary Hasmukh Adhia clarified on Wednesday. He added that ideally there should have been a mechanism in the law to deal with such a situation but the government may still look into the oversight.

“Transition stock bought from other states attracts only central sales tax of 2%, so a company in possession of such stock can’t be allowed to opt for composition scheme. We could have made a provision whereby such a company was allowed joined the composition scheme after paying some tax,” Adhia said. He added that this situation was largely hypothetical as most such firms have disposed of inter-state purchase before July 1. Under the composition scheme, a firm is required to file return quarterly and pay tax on the turnover. The scheme prohibits inter-state supplies but inter-state purchases are allowed. A firm with annual revenue of less than Rs 75 lakh can opt for the scheme but can’t avail input tax credit.

Additionally, the government will soon clarify on the taxability of earning made through advertisements received by Google on their Youtube channel or any webpage run by an individual or entity.

Answering a question regarding the treatment of income from Google ads, the government officials said that classification of such income would depend on various factors including place of supply, and a clarification in that regard will soon be issued by the revenue department.

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