Composition Scheme under GST - GST Registration, GST cancellation, GST Return Filing

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Composition Scheme under GST

Composition Scheme under GST

To give relief to small taxpayers, GST department framed the composition taxation scheme under GST. A person adopting this scheme can pay GST at a prescribed rate and relieved from maintain book of accounts.

To opt for composition scheme a taxpayer has to file GST CMP-02 on gst.gov.in at the beginning of financial year.

Composition scheme under GST Act can be adopted by following persons:

  • Traders with turnover limit upto Rs. 1.50 crores ( 75 Lacs for NE states except Uttarakhand)
  • For Restaurant Services with turnover upto Rs. 1.50 crores
  • Service provider with turnover upto Rs. 50 Lacs
Composition Scheme under GST
(Composition Scheme under GST)

GST Rate under composition scheme

  • Traders: 1% (0.5% CGST + 0.5% SGST)
  • Manufacturers: 2% (1% CGST + 1% SGST)
  • Restaurant: 5% (2.5% CGST + 2.5% SGST)
  • Service provider / Services along goods provider: 6% (3% CGST + 3% SGST)
Note: SMEs can now exclude exempt goods when calculating annual turnover.

Conditions for availing Composition Scheme

  • He not require to maintained detailed records
  • He not allowed to avail input credit
  • He not allowed to issue tax invoice. He cannot collect his tax from buyers & pay fixed levy in lieu of tax
  • He will issue Bill of Supply
  • He has to pay tax even on exempted goods
  • He has to mention the words ‘composition taxable person’ on every bill of supply issued by or signboard
  • The taxpayer has to pay tax at normal rates for transactions under the RCM

 

Who can't opt for Composition Scheme under GST

Following persons cannot opt for the composition scheme-
  • Ice cream, pan masala or tobacco manufacturers
  • A person making inter-state supplies of goods
  • A casual taxable person
  • A non-resident taxable person 
  • A person making any supply of goods through E-commerce operator

Advanatage of Compostion Scheme

  • He not require to maintained detailed records
  • Limited tax liabilities

 

Disadvantage of Compostion Scheme

  • He not allowed to avail input credit
  • He cannot collect his tax from buyers
  • He has to pay tax even on exempted goods
  • The taxpayer has to pay tax at normal rates for transactions under the RCM
  

Return filing under Composition Scheme 

Return to be filed on quarterly basis in form GSTR-04 within 18th day of end of each quarter. 


Exit from composition Scheme under GST

Taxable person under composition scheme under GST can exit from composition scheme any time and opt for normal tax scheme with benefits of input credit subject to following procedure prescribed in this regards


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