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Notification No. 02/2017 – Union Territory Tax Explained

by Shakshi Bharti | May 25, 2024 | GST, 2017 Notifications, Notifications, Union Territory Tax 2017 Notifications | 0 comments

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Important Keyword: Notification 02/2017 UTGST, GST composition levy limit, UTGST composition scheme, GST composition turnover limit, GST composition rates, GST small taxpayer scheme, GST composition eligibility, CBIC composition notification, GST composition levy UTGST, GST compliance composition scheme,

Words: 1085 Read time: 6 minutes.

[F.No.354/117/2017-TRU]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)

New Delhi, the 27th June, 2017

Notification No. 02/2017 - Union Territory Tax: Seeks to notify the turnover limit for Composition Levy for UTGST

GST: [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 10 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the Central Government, on the recommendations of the Council, hereby prescribes that an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at the rate of,––

one per cent. of the turnover in Union territory in case of a manufacturer,
two and a half per cent. of the turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II of the said Act, and
half per cent. of the turnover in Union territory in case of other suppliers:

Provided that a registered person shall not be eligible to opt for composition levy under sub-section (1) of section 10 of the said Act read with section 21 of the Union Territory Goods and Services Tax Act, 2017 if such person is a manufacturer of the goods, the description of which is specified in column (3) of the Table below and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table:-

TABLE

S. No.	Tariff item, sub- heading, heading or Chapter	Description
(1)	(2)	(3)
1.	2105 00 00	Ice cream and other edible ice, whether or not containing cocoa.
2.	2106 90 20	Pan masala
3.	24	All goods, i.e. Tobacco and manufactured tobacco substitutes

Explanation. –

In this Table, “tariff item”, “sub-heading”, “heading” and “chapter” shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.

(Mohit Tewari)
Under Secretary to the
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 02/2017 - Union Territory Tax

Q1: What is Notification No. 02/2017 – Union Territory Tax?

Answer: It is the notification that prescribed turnover limits and tax rates for GST Composition Levy under the UTGST framework.
It simplified GST compliance for small taxpayers.

Q2: What was the composition turnover limit under this notification?

Answer: The turnover limit was ₹75 lakh.
Eligible taxpayers below this threshold could opt for composition levy.

Q3: What tax rate applied to manufacturers?

Answer: Manufacturers were required to pay 1% tax on turnover in Union Territory.

Q4: What rate applied to restaurants?

Answer: Restaurants supplying services under Schedule II were required to pay 2.5% tax.

Q5: What rate applied to traders and other suppliers?

Answer: Other eligible suppliers were required to pay 0.5% tax on turnover in Union Territory.

Q6: Can composition dealers collect GST separately?

Answer: No.
Composition dealers cannot collect GST separately from customers.

Q7: Can composition dealers claim ITC?

Answer: No.
Composition levy taxpayers are not eligible to claim input tax credit.

Q8: Which manufacturers were excluded from composition levy?

Answer: Manufacturers of ice cream, pan masala, and tobacco products were excluded.

Q9: Why were certain manufacturers excluded?

Answer: These industries were considered sensitive or revenue-intensive sectors.
The Government restricted concessional treatment for such products.

Q10: Is composition levy beneficial for all businesses?

Answer: No.
Businesses dealing mainly with B2B customers may face difficulty because buyers often prefer ITC-enabled invoices.

Q11: What happens if turnover exceeds the threshold?

Answer: The taxpayer must shift to the regular GST scheme after crossing eligibility limits.

Q12: Is composition scheme still available today?

Answer: Yes.
However, turnover limits and conditions have evolved through later amendments.

Q13: Why do businesses seek professional advice before opting for composition levy?

Answer: Composition decisions affect ITC eligibility, pricing, invoicing, and customer relationships.
Professional analysis helps avoid operational mistakes.

Q14: Can service providers opt for composition levy?

Answer: Initially, composition levy mainly covered suppliers of goods and restaurants.
Later amendments expanded simplified schemes for certain service providers.