| What is Composition Scheme under GST ? |
| It is a simple, easy and hassle free scheme under GST. It is for small taxpayers which allows small taxpayers to pay GST “at a fixed rate” of his annual turnover. |
| Tax has to be paid on Quarterly basis and Small taxpayers do not have to maintain elaborate accounts and records. |
| It is a voluntary and optional scheme. |
| What are the benefits of Composition scheme ? |
| Easy Compliance |
| Simple Quarterly Return / Statement |
| Quarterly payment of tax |
| What are the disadvantages of Composition scheme ? |
| Cannot make inter-state outward supplies |
| Cannot claim ITC |
| Who can opt for Composition Scheme ? | |
| A registered taxpayer having aggregate annual turnover upto Rs. 1.5 Crores (75 Lakhs for taxpayers registered in special category states) can opt for Composition scheme. | |
| List of Special category States : | |
| Arunachal Pradesh | Nagaland |
| Manipur | Sikkim |
| Meghalaya | Tripura |
| Mizoram | Uttrakhand |
| Who cannot opt for Composition Scheme ? | |
| A registered taxpayer shall not be eligible to opt Composition scheme if : | |
| He is engaged in SUPPLY OF SERVICES (Except Restaurants serving food and beverages but NOT serving alcoholic liquor for human consumption. It means that Restaurant serving food and beverages but NOT SERVING alcoholic liquor can opt for Composition scheme). | |
| (Note : A service Provider can opt for composition scheme with some conditions) | |
| He is engaged in making EXEMPT supplies. | |
| He is engaged in making INTER-STATE OUTWARD supplies. | |
| He is engaged in making supplies through an E-COMMERCE OPERATOR WHO IS REQUIRED TO DEDUCT TCS U/S-52. | |
| He is a MANUFACTURER OF NOTIFIED GOODS. | |
| List of Notified Goods : | |
| Name of Goods | HSN |
| Ice cream and other edible ice, whether or not containing cocoa | 2105 |
| Pan masala | 2106 |
| Tobacco and manufactured tobacco substitutes | 24 |
| He is a CASUAL TAXABLE PERSON or NON-RESIDENT TAXABLE PERSON. | |
| He, in case of multiple registrations on same PAN, opts for any other scheme other than Composition scheme. | |
| Can a Service Provider Opt for Composition Scheme ? |
| A Service Provider having aggregate turnover upto Rs. 50 Lakhs can opt for composition scheme with payment of GST @ 6% if : |
| He is not engaged in making EXEMPT supplies. |
| He is not engaged in making INTER-STATE OUTWARD supplies. |
| He is not engaged in making supplies through an E-COMMERCE OPERATOR WHO IS REQUIRED TO DEDUCT TCS U/S-52. |
| He is not a MANUFACTURER OF NOTIFIED GOODS. |
| He is neither a CASUAL TAXABLE PERSON nor a NON-RESIDENT TAXABLE PERSON. |
| He, in case of multiple registrations on same PAN, opts for any other scheme other than Composition scheme. |
| If a person Supplies mainly Goods but sometimes supplies services also, is liable to pay GST @ 6% on services ? |
| A registered person mainly supplying goods MAY SUPPLY SERVICES of value upto 10% of annual turnover in the last FY or Rs 5 Lakhs whichever is higher and need to pay SGT @ 1% only (Except Restaurants serving food and beverages but NOT serving alcoholic liquor). |
| Rates of GST for Composition Taxpayers : | |
| Category | GST Rate |
| Manufacturers other than manufacturers of Notified Goods | 1% |
| Restaurants serving food and beverages but NOT serving alcoholic liquor | 5% |
| Service Providers having turnover upto Rs. 50 Lakhs | 6% |
| Any other Registered person | 1% |
| Note : Tax under RCM is required to be paid @ 5%. | |
| Can a Composition person issue tax-invoice and charge GST ? |
| A Composition person cannot issue a tax-invoice and cannot charge GST from the buyers. He has to issue BILL OF SUPPLY. He has to mention the words “composition taxable person, not eligible to collect tax on supplies”. |
| Validity of Composition Scheme ? |
| Once opted, a Composition scheme shall continue as long as the taxpayer wishes to stay-in and satisfies the eligibility criteria of the scheme. |
| Returns under GST ? |
| Quarterly Statement (CMP-08) : Details of Outward Supplies and RCM with Payment of Tax, Interest and Late-Fee. |
| Annual Return (GSTR-4) : Details of Outward Supplies, Inward Supplies and RCM with Reconciliation of Annual Tax, Interest and Late-Fee. |
| Can we switch from Regular to Composition scheme ? |
| Yes, but not as per our mood. A registered taxpayer can switch from Regular to Composition scheme at the end of every financial year only when the facility is provided on GST portal (Facility to opt-in Composition scheme is provided every year during Feb & March till 31st March of the FY). |
| In case of switching from Regular to Composition, one has to file an intimation of Closing stock as on 31st March by filing ITC-03 within 60 days from the date of switching-in (i.e. 1st April) and required to pay tax on closing stock. |
| Note : | A Composition person is required to mention “Composition Taxable Person” on every notice board or every signboard displayed at the prominent place at his every place of business. |
| Note : | A person having a single PAN and registered in more than one State under GST can opt for Composition scheme, provided he meets all the conditions of the scheme and if all registrations are under Composition scheme. A registered person cannot choose to opt for the Composition scheme in one state and not in other states. Further, an intimation for withdrawal from the scheme; or denial of the scheme with respect to any one registration under the same PAN will be applicable for all such registrations. |
