GST Composition Scheme is a special scheme meant for small businesses who find complying due compliances say keeping detailed records, filing regular returns under GST laws are burden. A small business who registered under GST Composition Scheme will enjoy certain benefits like concessional rate of tax, filing of quarterly returns instead of monthly return etc.
Eligibility for GST Composition Scheme
Small businesses, which have aggregate turnover up to Rs. 1.5 Crore in the preceding financial year, are eligible to get register under this scheme. However, the registration under this scheme is optional. In other words, the registered tax payer whose aggregate turnover is less than Rs. 1.5 crore may go for standard registration under GST Laws.
In case of North-Eastern states and Himachal Pradesh, the limit is Rs. 75 lakh.
Composite Tax Rates under GST Composition Scheme
|Sl. No.||Business||Tax Rate|
|1.||Manufacturers, other than manufacturers of such goods as may be notified by the Government||1 %|
|2.||Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II||2.5 %|
|3.||Any other supplier eligible for composition levy under section 10 and the provisions of Chapter II – Composition Rules||0.5%|
* In case of Traders, Turnover will be counted only for supply of taxable goods.
Aggregate Turnover for GST Composition Scheme
The term ‘aggregate turnover’ has been defined as –
The aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess. Section 2(6)
Condition for availing GST Composition Scheme
Who are not eligible for Composition Scheme?
High Speed Diesel, Motor Spirit, Natural Gas, Aviation Turbine Fuel, Alcohol for Human Consumption.
A taxable person not allowed or shall comply
Compliance under GST Composition Scheme
Due date of FORM GSTR-4 for the quarter July-September, 2017 has been extended till 24th December2017
(See Annexure for complete list of prescribed Returns)
Effective date of composition levy under GST Composition Scheme
There may be three situations, they are –
|Sl. No.||Situation||Effective date|
|1.||Who voluntarily opts composition scheme and allotted provisional registration – Rule 3(1)||Appointed date is 22nd June, 2017|
|2.||New Registration under Composition Scheme – Rule 3(2)||Effective date of registration|
|3.||Subsequent to standard registration – Rule 3(3)||The beginning of the financial year*|
* Under no circumstances compositions can be exercised during middle of a financial year.
Compulsory Switch over to Regular Compliance
Benefit of composition levy lapses on the day the tax payer crosses the prescribed aggregate turnover. Presently, threshold limit is Rs. 1.5 Crore.
The registered person can also withdraw from the scheme voluntarily.
Thereafter, normal procedure of invoice, record keeping, and filing of returns will be applicable. He will be allowed to claim credit of Input Tax held in stock or semi-finished goods or finished goods.
Penalties under GST Composition Scheme
The proper officer, if has reason to believe that a composition dealer has wrongly availed the benefit under this scheme, then after taking recourse to adjudication, he can direct such person to pay all the taxes which is become due under standard GST Registration.
Recent Developments – 10th November 2017
|Sl. No.||Quarter||Due Date|
|1.||July – August||31st December 2017.|
|2.||October – December||15th February, 2018|
|3.||January – March||30th April 2018.|
Annexure – Composite Tax Returns
|1.||GST CMP-01||To pay composition levy||Persons registered under previous regime and migrated to GST Regime|
|2.||GST CMP-02||To pay composition levy||Persons registered under the GST laws|
|3.||GST CMP-03||To pay composition levy||Intimation of details of stock on date of opting for composition levy by persons registered under previous regime and migrated to new regime|
|4.||GST CMP-04||To withdraw from composition Levy scheme||Registered Person|
|5.||GST CMP-05||To deny of option to pay compensation levy||Jurisdictional Officer|
|6.||GST CMP-06||To reply to Show Cause Notice||Registered Person|
|7.||GST CMP-07||To issue Order of acceptance / To reject reply to show cause notice||Jurisdictional Officer|