GST Composition Scheme for Small Tax payers | Section 10

Composition Scheme under section 10 of CGST Act, 2017- Great Initiative for Small Tax payers under GST Act

Composition Scheme {Section 10 of CGST Act, 2017}

-Composition Scheme is a simple and easy scheme under GST for taxpayers.

-Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover.

*Special Category States are Arunachal Pradesh, Mizoram, Uttarakhand, Nagaland, Manipur, Sikkim, Tripura and Meghalaya.

Common Points for both Categories specified above:-

i. Issue Bill of Supply in Place of Tax Invoice.

ii. Should not avail ITC and should not collect tax from Customers (Sec.17 (5) Blocked Credit).

iii. Should not supply Goods/Services provided in Negative List.

iv. Should not make any Inter State Supplies (i.e. he can make Inter State Purchases).

v. Should not Supply services through ECO who is required to collect TCS (u/s.52) (Exception: Hotels).

vi. Casual Taxable Person or a Nonresident Taxable persons are ineligible to opt for this scheme.

vii. Manufacturers of Ice cream, Pan Masala, Tobacco, Aerated Waters are ineligible to opt for this scheme.

viii. Also should pay tax if any inward supply is covered under Reverse Charge u/s.9 (3).

ix. If a taxable person has different segments of businesses under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.

x. Mention the words “Composite Taxable Person” on every signboard displayed at his Principal/Additional Place of Business

xi. Registered Person under Sec.10 or as per notification 2/2019 should mention at the top of Bill of Supply issued by them as “Not Eligible to collect tax on such supplies made by them”.

xii. Aggregate Turnover for the Previous Year:-

Includes	Excludes
Taxable Supplies	CSGT
Exempt Supplies (Except Interest on Loans/ Deposits/ Advances)	SGST
Exports	UTGST
Inter State Supplies	IGST
*of Persons having same PAN on All India Basis	Cess
	Value of Inward Supplies on which tax is Payable under RCM

How to get Registered under GST Composition Scheme:-

1) For New Registration:-

In registration form GST REG-01 itself

2) For Conversion from Regular to Composition Scheme:-

• File an Intimation in GST CMP-02 on the GST portal, Prior to the Commencement of the Financial Year for which Composition scheme is to be exercised.
• Composition scheme cannot be opted in the middle of the Financial Year, as the intimation is given before Commencement of F.Y.
• Option to pay tax under Composition scheme is available from the beginning of the Financial Year.
• After conversion, assesse should file GST ITC-03 within 60 days from the commencement of the relevant F.Y regarding reversal of ITC on stock in Hand at the beginning of the F.Y.

Penal Provision:-

• Penalty u/s.73 or 74 as the case may be shall be levied on irregular availment of Composition Scheme.

GST Payment by Composition Dealer:-

• Payment has to be made out of pocket for the supplies made by him.
• The GST payment to be made by a composition dealer comprises of the following:

a) GST on supplies made.

b) Tax on reverse charge.

Returns to be filed by a composition dealer:-

a) Quarterly Filing:-

GST CMP-08 for every quarter containing the details of Tax Payment by 18^th of the month succeeding such quarter.

b) Annual Return:-

Furnish GSTR-4 yearly on or before the 30^th day of April following the end of such F.Y.

Update due to Covid-19:-

• The time limit to opt into the composition scheme for the FY 2020-21 in form CMP-02 has been extended up to 30th June 2020. It applies for both taxpayers registered under section 10 of the CGST Act as well as the taxpayers opting for the scheme notified via CGST (Rate) notification no. 2/2019 dated 7th March 2019.
• The time limit to file form ITC-03 has accordingly been extended till 31st July 2020.
• The dealers can submit challan-cum-statement in form CMP-08 for the January-March 2020 quarter by 7th July 2020.
• The time limit to file GSTR-4 annual returns for the FY 2019-20 by the composition dealers has been extended till 15th July 2020.