prpri Composition Scheme Under GST ACT (Section 10) Composition Scheme Under GST ACT (Section 10)

GST has become a great issue for small business men who used to get their simple VAT return filed in a quarter, but under this GST regime it is required to submit three returns per month. It’s something very unfair especially for the small retailers, which increases the accounting charges as well as professional fees paid for filing of return. Keeping in mind the trouble of these small retailers and as well as other small business houses GST Act, has come out with the scheme called “COMPOSITION SCHEME.”

Section 10 of the Act, has specifically stated that those businesses whose annual turnover is less than Rupees 75 Lac, are allowed to get themselves under the compositon scheme. This section was specially crafted in a way to give relaxation to the small retailers or small business men from burdensome filing as well as keeping records of invoices. A taxable person registered under this section is not allowed to collect any tax from the receipt of supplies made by him nor shall he be entitled to any credit of input tax.

 “Every registered person engaged in the business of sale/or purchase, whose aggregate turnover in the preceding financial year did not exceed Seventy Five Lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed under the Act.”

Those registered and availed the said scheme are required to file fewer forms as compared to the number of forms be filed under the normal scheme.

To know more about composition scheme under gst.

There has been restriction to various categories of business to be registered under Section 10 of the Act.

It says “The registered person shall be eligible to opt under sub-section (1), if——-

a) He is engaged in the supply of services other than supplies referred to in clause (b) of Paragraph 6 of Schedule II

b) He is not engaged in making any supply of goods which are not leviable to tax under this Act;

c) He is not engaged in making any inter-state outward supplies of goods;

d) He is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and

e) He is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council.”

Rates have been pre-decided at which the tax has to be paid by the person registered under the composition scheme. Tax to be paid on the turnover basis, depending upon the slab within which the particular business falls, as stated below:-

A) 1% of the turnover in State or turnover in Union Territory in case of a manufacturer.

B)2.5% of the turnover in State or turnover in Union Territory in case of a person engaged  in making supplies referred to in clause (b) of Paragraph 6 of Schedule II, and

C).5% of the turnover in State or turnover in Union Territory in case of other suppliers.

Here I conclude this article by stating that the Government by implementing this Act, and particularly inserting this section have proved that GST is meant for all.

Feel Free to contact me for any query.

(Ayush Sinha, Practicing Company Secretary, Allahabad, 8588843596.)

Composition Scheme under GST: Key Features, Eligibility & Benefits

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Company: Ayush Sinha & Associates
Location: Allahabad, Uttar Pradesh, IN
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  1. Sohail says:

    But if a person already registered as normal tax payer but he want to amend his registration and opt for composition scheme so what type of consequences he has to face and rules and regulations he has to follow?
    Is he have to repay all the ITC that he already availed?

  2. Karan goel says:

    Karan Goel: Following are the supplies made my a registered person manufacturer of goods other than pan masala tobaco and ice cream in delhi in PFY :
    Taxable supplies intra state 5 lac
    Non taxable supplies inter state 10 lac
    Suppies chargeable to tax under rcm 6 lac
    Exports 5 lac
    Exempted Under N/N 12/2017 2 Lac
    Supplies chargeable to NIL rate 2 lacs
    State whethet he is eligible to composition scheme u/s 10 or not And what if all other suplies are same and non taxable supplies are made intra state
    (please read section 10 subsection 2 point b before answering)9996590684

  3. Sanjay kumar says:

    As you claim that it is 1℅ in case of manufacture then please clarify as to what is the rate applicable for traders under the composition scheme.

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August 2021