The provisions related to composition scheme are covered under Section 9 of Revised Model GST Law, which are as under:-
1. Eligibility – Aggregate Turnover in the previous year does not exceed Rs. 50 lakhs where aggregate turnover means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on all India basis.
2. Restrictions – Following person are not allowed to opt for composition scheme:-
(a) Service Providers
(b) Person who makes non-taxable supplies
(c) Person who makes inter-state outward supplies
(d) Person who makes supply of goods through e-commerce operator
(e) Manufacturer of notified goods.
3. Tax Rate – Supplier is required to pay GST at prescribed rates, which shall not be less than 2.5% in case of manufacturer and 1% in any other case. It means there will be minimum 5% (2.5% CGST and 2.5% SGST) in case of manufacturer and minimum 2% (1% CGST and 1% SGST) in case of trader or any other eligible person.
4. Other Conditions –
(a) Permission will not be granted to taxable person unless all the registered taxable person having same PAN also opt for this scheme.
(b) Permission shall be withdrawn if aggregate turnover exceeds Rs.50 lakhs
(c) Taxable person shall neither collect any GST from customers, nor shall take credit of GST paid to suppliers meaning thereby GST under this scheme is paid out of own funds only and tax credit chain is broken by opting for composition scheme.
(d) As per Sec 34, taxable person opting for composition scheme shall furnish quarterly returns electronically within 18 days of end of the quarter.
