There are high provisions under GST for returns, tax payments, and details to be submitted by registered persons which cannot be complied with by small suppliers and manufacturers. A composition scheme under GST has been provided as an option for those small suppliers and manufacturers to pay amount (not tax), in lieu of tax payable in normal levy. This scheme provide for less number of returns, less number of compliance and less maintenance of books of accounts etc. A registered person can opt for this option (Composition Scheme) subject to certain conditions specified in the scheme.
1. Eligible Persons for Composition Scheme under GST: Person must be a registered person, whose aggregate turnover in preceding financial year did not exceed seventy five lakh (75 lakhs) rupees. For special category states except Uttarakhand, this turnover limit has been reduced to fifty lakh (50 lakhs) rupees. If a registered person, having the same PAN, has more than one registration, whether in same state or in two different states as Head office and branch, then both will have to opt for composition scheme. A composition supplier is allowed to make purchases from outside state.
2. Non-eligibility for GST Composition Scheme: A person shall not be eligible to opt for this scheme if-
a) Engaged in supply of services other than supplies of food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption) i.e. Restaurant services;
b) Engaged in making any supply of goods which are not leviable to tax under this act;
c) Engaged in making any inter-state outward supplies of goods;
d) Engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source u/s 52; or
e) Manufacturer of notified goods u/s 10(2)(e) [CGST] i.e.-
♦ Ice Cream and other edible ice whether or not containing cocoa,
♦ Pan Masala, or
♦ Tobacco and manufactured tobacco substitutes.
3. Tax Rate Structure under GST Composition Schemes: Three rates of tax have been prescribed for composition scheme which are as given below-
|Sr. No.||Category of registered person||Rate of Tax
|1.||Manufacturers, other than notified manufacturers||2%|
|2.||Suppliers- Restaurant Services [Schedule II, Para 6 Clause (b)]||5%|
4. Restrictions and Conditions: The Person should comply with following conditions before exercising the option of composition scheme-
a) Not being a casual taxable person or a-non- resident taxable person;
b) Goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax u/s 9(4) i.e. under reverse charge mechanism; and
c) Not engaged in manufacturing of notified goods.
5. Timing for intimation of exercising option of GST Composition Scheme: A person, who wants to exercise option of this scheme, is required to intimate electronically through filing specified form in specified time limit. Person need not to file fresh intimation every year. Any intimation in respect of any place of business in any state or UT shall be deemed to be an intimation in respect of all other places of business registered on the same PAN.
|Sr. No.||Timing for exercising option of this scheme||Time Limit||Intimation Form|
|1||Migration||Prior to appointed day, but not later than 30 days or further extended period.||GST CMP-01|
|2||Opt for Composition in future||Prior to the commencement of the financial year||GST CMP-02|
|3||New Registration||Date of application for new registration||Part B of GST REG-01|
6. Effective Date for Composition Levy under GST: The option to pay thx under this scheme shall be effective from the date based upon the timing of exercising the option of this scheme.
|Sr. No.||Timing for exercising option of this scheme||Effective Date|
|2||Opt for Composition in future||Beginning of Financial Year|
|3||New Registration||Date on which the person becomes liable to registration where the application for registration submitted within 30 days, if not, then date of grant of registration.|
7. Person migrating to GST – A person, who has been granted registration on a provisional basis is required to complied with the following conditions-
a) File intimation electronically for opting for composition scheme prior to appointed day not later than 30 days or any further extended period. [GST-CMP-01]
b) Furnish details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under composition scheme within 60 days from the date on which the option for composition levy is exercised or any further extended period. [GST-CMP-03]
c) Migrating person cannot opt for this scheme if, goods held in stock by him on the appointed day have been-
♦ Purchased in the course of inter-state trade or commerce;
♦ Imported from a place outside India;
♦ Received from his branch situated outside the state; or
♦ Received from his agent or principal outside the state.
8. Withdrawal from Composition scheme: This option shall remain valid so long as he satisfies all the conditions. The option shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds specified limit or occurrence of event of ineligibility. After ineligibility, person shall file an intimation for withdrawal within 7 days. If registered person intends to withdraw from this scheme, then he has to file intimation before the date of such withdrawal. Person shall also issue tax invoices instead of Bill of Supply for every taxable supply made thereafter. If proper office has reason to believe that registered person was not eligible to opt for this scheme then he can also issue order of withdrawal after giving opportunity of being heard and such person will be liable to pay the differential amount of tax along with penalty.
9. Returns under Composition Scheme: Quarterly return [GSTR-4] is required to be filed by composition supplier till 18th of the month succeeding quarter. Composition supplier shall also be required to file annual return in Form GSTR-9A.