Under the GST law, Composition scheme is an expedient way to escape from various GST formalities and pay the tax at a low prescribed percentage based upon the turnover of the business.
The composition scheme was introduced to bring straightforwardness and to minimize the compliance cost for the small taxpayers. Businesses with an aggregate turnover of up to 100 lakh in a preceding financial year shall be eligible for composition scheme.
Small taxpayers registered under composition scheme will not be required to raise any tax invoice, instead simply need to issue a Bill of Supply for the supplies made by them.
Though, the scheme is optional but cannot be availed by every person as the businesses with an aggregate turnover less than 1 crores in a financial year can opt for this scheme. However, in case of special category States (except Jammu & Kashmir and Uttarakhand) the threshold limit for composition scheme has been increased to Rs 75 Lacs.
In order to calculate the aggregate turnover of the business, all businesses with the same PAN will be clubbed for the purpose of composition scheme. However, the benefit of this scheme can be avail by Manufacturers of goods, Dealers, and Restaurants.
For an instance:
A dealer ‘Mr. Amit’ has two offices in Mumbai. In order to determine whether ‘Mr. Amit’ is eligible to opt the composition scheme, turnover of both the offices would be taken into account and if the same does not exceed ` 100 lakh.
The following people cannot avail the benefit of the GST composition scheme:
The person seeking registration under composition levy needs to furnish the details of:
A person can get the registration under the composition scheme in the following manner:
Situation 1: Where a person who is already registered under the Pre-Gst tax regime
Situation 2: Person applying for fresh registration.
Every person who is liable to get registered shall, before applying for registration, declare his PAN, mobile number, e-mail address, State/UT in Part A of FORM GST REG-01 on GST Common Portal. The person seeking for registration has given an option to pay tax under composition levy in Part B of the registration form, viz., FORM GST REG-01.