GST Composition scheme is an alternative taxing method introduced for small taxpayers with low turnover. The composition scheme has been structured with the aim to make tax compliances simpler and cost-effective for the small taxpayers. In this article we’ll try to describe the GST composition scheme limits.
Business with a turnover of less than Rs. 100 lakhs, (less than Rs. 75 Lakhs in the Special Category States), can opt to pay under the GST composition scheme. The aggregate turnover is based on all businesses registered with the same PIN number, and thus all businesses registered the same PAN number can be registered as composition dealers or can be registered under the normal provision of the GST law but not a combination of both. In simple words, a business having different segments cannot be selective for opting composition scheme for few segments. The composition scheme has to be taken for all the business segments collectively.
Persons who are not eligible for the Composition Scheme under GST
Below are the specified conditions that must be satisfied in order to avail composition scheme:
Rates under GST Composition Scheme
|Composition Scheme – Goods and Service Tax Rates|
|Supplier of food & drinks (restaurant business)||2.5%||2.5%||5%|
|Service Providers||Supplier of services (Except supplier of food and non-alcoholic drinks) cannot opt composition scheme.|
Under the composition scheme, the payment of GST has to be made out of pocket. In simple words, a taxpayer who opted for Composition Scheme cannot collect tax from its customer i.e. cannot charge GST in their Invoice.
Details of stock to be furnished:
The person seeking registration under composition levy needs to furnish the details of:
Advantages and Disadvantages of Composition Scheme under GST
Advantages of opting GST Composition Scheme:
However, there are certain disadvantages as well if a taxable person is opting for the composition scheme under GST.
Disadvantages of opting composition scheme under GST: