What is Composition Scheme in GST?
Composition Scheme under GST is a scheme which offers comparatively lesser compliance’s.
Small taxpayers can get rid of various GST formalities and can pay GST at a fixed rate of turnover.
For fresh registrations under the GST Composition Scheme, an intimation in Form GST REG- 01 must be filed.
This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 Crores. In case of North-Eastern states and Himachal Pradesh, the limit is Rs 75 lakhs.
1. The major disadvantage of this scheme is that NO INPUT TAX CREDIT is allowed to the Composition Supplier.
2. RCM has to be paid as per normal tax rate.
3. The dealer cannot supply supply non-taxable goods like Alcohol under composition scheme.
4. The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
5. The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him.
6. The taxpayer have to opt for composition scheme for all the GSTIN registered under same PAN.
7. No Inter-state supply of goods can be done.
8. Supplier can now also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher.
A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot charge tax from their customers. They need to pay tax out of their own pocket. Hence, the dealer has to issue a Bill of Supply. The dealer should also mention “composition taxable person, not eligible to collect tax on supplies” at the top of the Bill of Supply.
A GST composition scheme dealer is required to file a quarterly composition return form i.e. Form GSTR-4 by the 18th of the month after the end of the quarter. Also, an annual composition return form i.e. Form GSTR-9A has to be filed by the 31st of December of the next financial year.
|Manufacturer and Traders||0.5% CGST and 0.5% SGST.|
|Restaurants (Not Serving Alcohol)||2.5% CGST and 2.5% SGST.|
|Service Providers||3% CGST and 3% SGST.|
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