Composition Scheme – GST

Sr.No Questions Answer
1 Applicability A Registered Person whose Aggregate Turnover in preceding FY does not exceed

i)75 Lakh (For other than Specified States)

ii)50 Lakh  (For Specified States i.e. North eastern States)

2 Optional or Compulsory It is optional scheme
3 Tax Rate Traders : 1.00% [CGST+SGST]

Manufacturer : 2.00 % [CGST+SGST]

Restaurants : 5.00 % [CGST+SGST]

4 Input tax credit Not available
5 Invoice Bill of supply is required to be issued instead of Tax Invoice
6 Reverse Charge Mechanism Applicable
7 Non eligibility 1.Service other than Restaurants services

2.Person making inter state outward supplied of Goods

3.Person making any supply of Goods through Electronic commerce operator

8 It Turnover exceeds 75 / 50 Lakh in FY Required to file intimation for withdrawal of composition scheme within 7 days of crossing limit in FORM GST CMP -04
9 Other Requirement Required to mention

i)“Composition Taxable Person, not eligible to collect tax on supplies” at the top of bill of supply issued

ii)“Composition taxable person” on every signboard or notice

  • Advantage:

1. Simple to understand

2. GST Compliance on Quarterly basis

3. More suitable for business making B2C supplies

4. Less Records to be maintained

  • Disadvantage:

1. No ITC

2. Person is required to pay tax under reverse charge mechanism

3. Less competitive in B2B Market

4. GST from own pocket as person can not charge in bill of supply

Check GST Common portal for More Information

Author Bio

Qualification: CA in Practice
Company: Jinesh S Mehta & Co
Location: Ahmedabad, Gujarat, IN
Member Since: 12 Jul 2017 | Total Posts: 3
I am Practicing Chartered Accountant since 2012 in Ahmedabad exclusively in Income Tax, GST & Project Finance. View Full Profile

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December 2020