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.

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.)

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4 responses to “Composition Scheme Under GST ACT (Section 10)”

  1. Jitendra Gurav says:

    1% FOR TRADERS
    2% FOR MANUFACTURERS
    5% FOR RESTAURANTS

  2. 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.

  3. T A Mutha says:

    A) 1% of the turnover in State or turnover in Union Territory in case of a Trader and not manufacturer, please check.

    • csayush says:

      Hello,
      Good to see your response.
      But as per my knowledge it is manufacturer but not traders.

      Please refer Section 10(1)(a) of the Act, it might give you more clarity related to the said matter.

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