Before learning the benefits of composition scheme of GST India Online, it’s important to know about it. Under the section 10 of GST law, there is a provision that states only those need to register under the GST composition scheme whose annual business turnover is less than fifty lakhs. It is because they might not have resources and expertise to fulfill all the requirements mentioned under the GST. This scheme will help small businesses in reducing the burden of GST compliance for small businesses. Under the composition scheme, taxpayers need not to provide the tax invoices and at the same time, they cannot use the credit of tax input. Let’s take a look at four important benefits of the GST composition scheme.
1. Quarterly Returns Only
The taxpayers under the GST composition scheme are required to provide only the quarterly returns. Therefore, the major advantage of people running small businesses is that they can focus more on their work rather than being occupied in preparing and filing tax under the GST compliance procedures.
2. Nominal Tax Rate
One of the biggest benefits of the GST composition scheme is that the taxpayers have to pay the tax at a nominal rate. The taxpayers whose annual turnover is less than fifty lakhs are not eligible for collecting and uploading tax invoices. The owners of small businesses who are registered under the composition scheme will be benefited more than the regular GST taxpayers because they are supplying daily-use goods and products to the consumers at almost similar rates. Thereby, earning more profit with low tax liability.
3. High Fund Availability
The taxpayers who will be registered under the composition scheme will have high fund availability for their businesses. It is because the output tax liability is almost negligible and so such taxpayers need not to worry about return filing of the supplies. Whereas the case is totally different on the other side. In case of normal taxpayers, they have to pay the output taxes at a standard rate and the input credits will be available only if the taxpayer’s file the return online. That’s the reason the large chunk of working amount will always remain blocked as input credit.
4. Competitive Supply Market
Most people are dealing with a misconception that taxpayers registered under the composition scheme doesn’t have a competitive edge. The profit margins and product sale value of small businesses are much more than large businesses. They can easily outplay the economies by offering competitive prices and having a better hold on the local supply market. The composition scheme, therefore, ensures the small businesses are getting profits even while carrying out intrastate transactions and supplies at the same time giving a competitive edge.
The advantage of the composition scheme is given to only those who carry out intrastate transactions and supply of goods but not for interstate supplies. Therefore, such suppliers need to get registered as normal taxpayers under GST India, the new online tax regime.