Notification No. 16/2017 – Union Territory Tax Explained

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Notification No. 16/2017 - Union Territory Tax: Seeks to amend notification No. 2/2017-Union Territory Tax.

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

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 makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.2/2017- Union Territory Tax, dated the 27^th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub- section (i), vide number G.S.R. 648 (E), dated the 27^th June, 2017, namely:-

In the said notification, for the words “seventy-five lakh rupees”, the words, “one crore rupees” shall be substituted.

(Ruchi Bisht)
Under Secretary to
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 16/2017 - Union Territory Tax

Q1: What is Notification No. 16/2017 – Union Territory Tax?

Answer: It is a UTGST notification increasing the Composition Scheme turnover limit.
The notification amended Notification No. 2/2017 by replacing the ₹75 lakh limit with ₹1 crore.

Q2: What was the main amendment introduced?

Answer: The turnover threshold was increased.
Eligible businesses could opt for Composition Scheme up to ₹1 crore turnover instead of ₹75 lakh.

Q3: Which law governs this notification?

Answer: The notification was issued under Section 10 of the CGST Act read with Section 21 of the UTGST Act.
These provisions govern Composition Scheme implementation under GST.

Q4: Why was the threshold increased?

Answer: Mainly to reduce compliance burden on small businesses.
During early GST implementation, many small taxpayers were struggling with regular GST procedures.

Q5: Who benefited from this amendment?

Answer: Small businesses operating in Union Territories benefited most.
Businesses with turnover between ₹75 lakh and ₹1 crore became newly eligible.

Q6: Does Composition Scheme allow Input Tax Credit?

Answer: No.
Composition taxpayers generally cannot claim Input Tax Credit on purchases.

Q7: Can composition taxpayers issue tax invoices?

Answer: No, they usually issue bill of supply instead.
They cannot separately collect GST from customers like regular taxpayers.

Q8: Did this amendment reduce GST rates?

Answer: No, the amendment mainly expanded eligibility.
It focused on compliance relief rather than rate reduction.

Q9: Was this notification part of early GST reforms?

Answer: Yes.
It was one of several stabilisation measures introduced during the first GST transition phase.

Q10: Is Composition Scheme always beneficial?

Answer: Not necessarily.
Businesses losing significant ITC may find regular GST more beneficial.

Q11: Does UTGST follow CGST composition rules?

Answer: Largely yes.
UTGST composition provisions closely mirror CGST provisions through legal linkage.

Q12: Can businesses switch between schemes later?

Answer: Yes, subject to eligibility conditions.
Businesses may migrate between regular and composition schemes depending on turnover and compliance requirements.

Q13: Are turnover limits still the same today?

Answer: No, GST thresholds have evolved over time.
Businesses should always verify the latest applicable limits.

Q14: Why do businesses still misunderstand Composition Scheme?

Answer: Many focus only on simpler filing and ignore business limitations.
The scheme has operational restrictions that must be evaluated carefully.

Q15: Where can businesses get GST compliance support?

Answer: Businesses can seek expert support for GST registration, filing, and scheme evaluation.
Services like GST Return Filing and GST Compliance are often useful for maintaining proper GST compliance.

Conclusion

Notification No. 16/2017 – Union Territory Tax was an important relief measure during the early GST transition phase.

In simple terms, it expanded the Composition Scheme eligibility threshold from ₹75 lakh to ₹1 crore, helping more small businesses benefit from simplified GST compliance.

The amendment reflected the Government’s recognition that many small taxpayers needed flexibility and reduced compliance pressure during GST implementation.