Regular dealers are primarily covered under Section 9 of the CGST Act, 2017, which deals with the levy and collection of GST. This section mandates that every registered person (except those under the Composition Scheme or exempt categories) must pay tax on their outward supplies at the applicable GST rates.
Additionally, Section 22 specifies the threshold limit for mandatory registration for regular dealers based on turnover.
GST law provides two types of tax compliance structures for businesses—Regular Scheme and Composition Scheme. While the Regular Scheme applies to most taxpayers, the Composition Scheme is a simplified tax regime for small businesses with lower compliance requirements. Here’s a detailed comparison:
| Criteria | GST Dealers under regular scheme | Composite Dealer |
| Eligibility Criteria | Businesses with turnover above the composition scheme threshold or those opting for the regular scheme. | Small businesses with turnover up to ₹1.5 crore (₹75 lakh for special category states). |
| Applicable GST Rates | 5%, 12%, 18%, 28% (as applicable based on goods/services). | 1% for traders and manufacturers, 5% for restaurants (without alcohol), 6% for service providers. |
| Tax Collection Approach | Collects GST from customers and can claim input tax credit (ITC). | Cannot collect GST from customers and cannot claim ITC. |
| Input Tax Credit (ITC) | Eligible to claim ITC on purchases, reducing tax liability. | Not eligible to claim ITC. |
| Return Filing Requirement | Monthly/quarterly GSTR-1, GSTR-3B, and annual GSTR-9. | Quarterly CMP-08 and annual GSTR-4. |
| Tax Payment Methodology | Pays tax on actual sales after adjusting ITC. | Pays a fixed percentage of turnover as tax. |
| Interstate Trade Permissibility | Allowed to make interstate sales of goods and services. | Cannot make interstate supply of goods (services allowed from 2019). |
| E-Way Bill Compliance | Required for movement of goods above specified value. | Required, but compliance is simpler. |
| Invoice Issuance | Issues tax invoice showing GST separately. | Issues a bill of supply (cannot charge GST separately). |
| Composition Scheme Restrictions | Not applicable as businesses under this category follow normal GST rules. | Certain businesses like manufacturers of ice cream, pan masala, and tobacco, as well as service providers (except restaurants), are not eligible. |
| Compliance Burden | High due to multiple return filings, ITC reconciliation, and detailed records. | Lower compliance requirements with fewer return filings. |
| Suitability | Ideal for medium and large businesses that deal with input tax credit and require flexibility in operations. | Suitable for small businesses with limited turnover looking for ease of compliance |
Both schemes have their advantages and limitations, and businesses must evaluate their nature of operations, turnover, and compliance capabilities before choosing between the Regular and Composition schemes. The Composition Scheme provides relief to small businesses by simplifying tax filing and reducing compliance burdens, whereas the Regular Scheme offers benefits like ITC and the ability to expand across states.
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