Composition Scheme

Composition Scheme is a big relief for small traders and simple scheme for small taxpayer.

How Composition Scheme is beneficial for small taxpayer?

  • Small taxpayer can get rid of GST formalities and pay tax at a fixed rate on turnover after GST Registration.
  • Under this Scheme a payer is required to file summarized returns on Quarterly Basis instead of three-monthly returns.
  • We required to file only 2 Returns on a quarterly Basis and annual return.
  • No need to maintain detailed records as in case of normal taxpayer, so there is additional benefit.
  • A registered Taxpayer, who is registered under the Composition Scheme Will pay tax at a rate of:
  • 1% for manufacturers
  • 1% for other suppliers of turnover.
  • 5% for Restaurant Sector.

Eligibility Criteria

  • Applicant who come under composition scheme must have GST registration.
  • A registered taxpayer whose aggregate turnover is less than 1.5 crore or 75 lakhs in some states.
  • Business dealing only in goods not in services but except restaurant services.

Taxable persons excluded from the scheme

  • People making supply of goods interstate. So, if someone is making interstate supply, then he has to get registered under regular scheme.
  • Supply through E-commerce operation.
  • Not to manufacture tobacco.
  • Not a Casual taxable persons or non-resident taxable persons.

If a taxable person has different business segment having same PAN so, he/she must be registered all such business under the scheme.

Limitations

  • We cannot make interstate supply under composition scheme.
  • Under this scheme registered persons cannot avail the benefit of Input Tax Credit, so it would become part of cost.
  • Issue bill of supply instead of Tax invoice.
  • Person under composition scheme should have their own business in their own state.

ITC provisions

  • Under composition scheme, option to pay tax lapses from the day on which his total turnover exceeds the specified limit.
  • If an applicant withdrawal from the scheme he has to file GST return within seven days when their threshold limit has been crossed.

Email your query at  onlinetaxfilingindia.com@gmail.com and know more about company registration. WhatsApp or Call us @ 7900 567 567, so that you can get your gst registration online done.

Leave a Comment

Your email address will not be published. Required fields are marked *