The implementation of the Goods and Services Tax (GST) has posed a massive challenge for the Small and Medium Enterprises (SMEs). These enterprises need to cope up with endless compliances under the GST law. And, while dealing with the compliances, the SMEs lose sight of their core business processes. Hence, the Government came up with GST Composition Scheme that helped in easing out the burden of the SMEs.
Under the composition scheme, the businesses whose annual turnover is up to 1.5 crores INR need to pay a certain percentage of their turnover as tax under GST. The turnover limit for the North-Eastern states and Himachal Pradesh is 75 lakhs INR. This saves them from the burden of paying monthly taxes as the tax under composition scheme has to be paid at a minimum rate on a quarterly basis.
However, if the turnover exceeds the prescribed limit, then the business has to get itself registered under the regular GST scheme.
While calculating the turnover, the turnover of all the businesses registered with the same PAN is taken into consideration.
The dealer who is willing to opt for composition scheme has to bring the same in the notice of the Government in the beginning of the financial year. In order to be a part of the composition scheme, a dealer needs to file GST CMP-02 with the Government. He has to login to the GST portal to get started with the process.
The return that is to be filed under the composition scheme is GSTR-4 by 18th of the month after the end of the quarter. Another return i.e. GSTR-9A is an annual return that is to be filed by 31st December of the next financial year.
|GST Rates for Composition Scheme
|Manufacturers & Traders (For Goods)
|Restaurants (Not serving alcohol)
|Important Note: The Service Providers are not eligible for Composition Scheme.
No, a composition dealer cannot collect tax from his customers. He is supposed to pay the same on his own.
A composition dealer cannot avail Input Tax Credit on purchases under GST.
No. The composition scheme will not be applicable to each branch separately.
An inter-state dealer cannot opt for composition scheme because it is only meant for intra-state supply of goods.
No, a composition dealer cannot opt for composition scheme anytime during the year. He has to make a declaration on the GST portal before the beginning of every financial year.
A composition dealer need not maintain detailed records as a normal taxpayer is required to maintain.
A composition dealer can issue a Bill of Supply. He should mention “Composition Taxable Person, not eligible to collect tax on supplies” at the top of the Bill of Supply.
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