Composition Scheme under GST
- The objective behind the composition scheme is to bring simplicity and reduce the compliance cost for small taxpayers.
- Composition Scheme under GST is a simple and easy scheme for Small taxpayers.
- Features of Composition Scheme.
Turnover :- A taxpayer whose turnover is below Rs 1.5 Crores can opt in for Composition Scheme. (can be extended to Rs.2 crore)
In case of North-Eastern states and Himachal Pradesh, the limit is Rs 75 lakh.
Tax Rate :- Uniform tax rate of 1% applicable for both traders and manufacturers.
Services :- Composition suppliers allowed services upto Rs. 5 lakh per annum for eligibility.
Exempted supply :- Exempted supply not to be taxed at 1%.
Restaurant :- Restaurant sector taxpayers may also opt for the scheme. Tax rate is 5%
Service providers :- Service providers are not eligible
dealer registered under composition scheme is not required to maintain detailed records
input tax credit
Composition Dealer is not allowed to avail input tax credit of GST paid to their supplier.
Bill of Supply
Bill of Supply :- A composition dealer cannot issue tax invoice, instead they can issue a bill of supply. This is because a composition dealer cannot charge tax from their customers.
GST payment :- GST Payment has to be made out of pocket. The consumer/ the receiver of supplies will not be liable to pay GST to the supplier .
Return on a quarterly basis
The taxable person is required to furnish only one return i.e. GSTR-4 on a quarterly basis and an annual return in FORM GSTR-9A.
GST Tax from buyer
Composition Dealer is not allowed to collect composition tax from the buyer.
composition taxable person
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business
The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him.
Composition Scheme is available only for intra-state supplies.The taxpayer can only make intra-state supply (sell in the same state) i.e. no inter-state supply of goods.
taxpayer has to file Form GST CMP-01 or GST CMP-02 with the government. This intimation should be given at the beginning of every Financial Year by a dealer wanting to opt for Composition Scheme.
The taxpayer must mention the words ‘composition taxable person, not eligible to collect tax on supplies’ at the top of the bill of supply issued by him.
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
*_GST Rates on Composition Scheme U/S 10. wef 01.01.2018_*
🍎For manufacturers – 1% (0.50% SGST and 0.50% CGST)
🍎For Restaurant Service-5% ( 2.5% SGST and 2.5% CGST)
🍎For Traders- 1% of the _”Turnover of taxable supplies of Goods_ ” ( 0.5%SGST and 0.5% CGST)