Kaushal Agrawal

Who can opt for composition scheme?

Composition scheme should be opted by only those manufacturers or traders who sells directly to the consumers. Composition scheme can also be opted by restaurants and their aggregate turnover exceeds Rs. 20 Lakhs and is up to Rs. 75 Lakhs.

Composition supplier may purchase goods from unregistered or registered dealer. But if they purchase from unregistered dealer they need to pay GST on reverse charge basis if their daily payment exceeds Rs. 5,000. A consolidated invoice should be made at the end of the month detailing each item details and their tax rates.

They need to file quarterly return instead of monthly return.

Tax rate 2% (manufacturer) or 5% (Restaurant) or 1% (Trader) of turnover. Turnover is defined u/s 2(112) which is aggregate of taxable supplies and exempted supplies.

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