COMPOSITION SCHEME IN GST

Hello Friends,

My this blog is related to tell you about the Composition Scheme in GST. GST Composition Scheme is the boon for the small taxpayers. It is the magical scheme with low tax rates, lessor tax compliance and not mandatory to maintain detailed records as needed by normal taxpayers.

Points to Remember:

Who can opt for Composition Scheme?

• A Taxpayer whose Turnover is below Rs. 1.5 crore can opt for Composition Scheme.  

• In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakhs and 

• The Government has set the threshold turnover for service providers at Rs. 50 lakhs to be eligible for this scheme.

Who cannot opt for Composition Scheme?

The following people cannot opt for the scheme:

• Manufacturer of ice cream, pan masala or tobacco

• A person making interstate supplies

• A casual tax person or non- resident taxable person

• Business which supply goods through e-commerce operator

• A person supplying exempted goods

• A  restaurant which serves Alcohal 

What is the tax rate?

It will be between 1% to 6%.

• For Manufactures : 1% (0.5% CGST & 0.5% SGST)

• For Restaurant Services: 5%  (2.5% CGST & 2.5% SGST)

• For Service Providers: 6%  (3% CGST & 3% SGST)

Dos for Composition Dealer:

• Lesser compliance (Returns, Maintaining Books of records, Issuance of Invoices)

• Issue only Bill of Supply not Tax Invoice as he can't charge tax from the customers and has to pay from his own pocket. 

• Taxes are at a lower rate

• The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism (RCM)

• The taxpayer has to mention the words 'Composition Taxable person' on every bill of supply issued by him.

• The taxpayer has to mention the words 'Composition Taxable person' on every notice board at their place of business.

• Need to file only quarterly return (GSTR-4) and an Annual Return (GSTR-9A) only.

• The taxpayer can only do Intrastate (within a same state) supply.

• The taxpayer can make interstate (One state to another) purchases. 

Don'ts for Composition Dealer:

• No input tax credit can be claimed 

• No issue of Tax Invoice only Bill of Supply as he can't charge tax from the customers. 

• No interstate Supply

Few Important GST Forms for Composition Scheme:

• CMP-01: To opt into the scheme by provisional GST registration holder(from VAT regime)

• CMP-02:  Intimation of willingness to opt into the scheme for GST registered normal taxpayers

• CMP-03:  Details of stock and inward supplies from registered and unregistered  persons 

• CMP-04:  Intimation of withdrawal from the scheme

• CMP-08:  Statement Cum Challan

I hope it will be helpful to you. 

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA (Finance)

9871580806, 8826566751

rightsteptoinvest@gmail.com