HYDERABAD: Small traders and manufacturers in the furniture industry in Telangana may make use of the Composition Scheme to avoid 28 percent taxation under Goods and Service Tax(GST).
In the Composition Scheme under GST, a taxpayer will only be required to file summarised returns on a quarterly basis, instead of three monthly returns. Only businesses dealing in goods with an annual turnover of less than Rs 50 lakh are eligible for the scheme. Those manufacturers registered with the scheme will be paying only 1 percent tax.
The furniture sector in two Telugu speaking states together saw a Rs100 crore loss in their three-day strike against the GST tax slab they are under.
“Presently the sector was under 12 per cent VAT and other taxes and now it is going to be 28 per cent. The purchasing power of the consumer will come down and sales will thus get affected. This is an unorganised sector that the central government wants to bring into the organised sector but such steep taxation will prevent traders from registering with GST. This will end up with this sector continuing to operate from the informal economy,” said Srinivas T, a member of All India Furniture Manufacturers and Dealers Association.
“To avoid the 28 per cent GST, the sector could start selling goods as unbilled items,” said Srinivas.“Furniture sector in the unorganised sector will make use of this, thus bypassing GST.
Thus the central government's efforts to bring the sector into the formal economy and make it organised could fail, he added.