All about Composition Scheme under GST

To ease the compliance burden of small taxpayers under GST, the government has come with the Composition scheme under which all the small taxpayers whose turnover is up to Rs. 75 lakhs ( Rs. 50 lakhs in case of few States) can register themselves under the composition scheme and can pay the taxes as per the provisions laid down with regard to the same. However, the said scheme is optional and subject to certain eligibility conditions.

People not eligible for composition scheme

Following persons are not eligible to opt for the composition scheme:

a) a casual taxable person or a non-resident taxable person;

b) suppliers whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;

c) supplier who has purchased any goods or services from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;

d) supplier of services, other than restaurant service;

e) persons supplying goods which are not taxable under GST law;

f) persons making any inter-State outward supplies of goods;

g) suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52;

h) manufacturers of Pan Masala, tobacco, ice cream and edible ice.

A person is eligible to be governed by this scheme until he satisfies all the conditions and the eligibility requirements.

Tax rates under Composition scheme

S. no Category of person Rate of tax
1. Manufacturers, other than those manufacturing Pan Masala, tobacco, ice cream and edible ice 2% of the turnover
2. Restaurant services 5% of the turnover
3. Traders or any other supplier eligible for composition levy 1% of the turnover

Note: Turnover shall include all taxable supplies, exempt supplies and exports made.

Forms and due date under Composition scheme

Form no Details Due date
GST-CMP-01 Form for registration under composition scheme Within 30 days from the date from falling within purview of GST
GST-CMP-04 Form for withdrawal from the scheme Within 7 days from the occurrence of such event
GSTR-4 Quarterly return under GST for suppliers registered under composition scheme 18th of the month succeeding the quarter
GSTR-9A Annual Return 31st December of next Financial year
GST-ITC-03 Intimation of ITC reversal/payment of tax on inputs held in stock and capital goods Within 60 days from commencement of relevant financial year.


Eligibility for claiming Input Credit

The registered person opting to pay tax under composition scheme is required to pay an amount equal to the input tax credit in respect of inputs held in stock, on the day immediately preceding the date of exercise of option. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs.

Further, a registered person under composition scheme is not eligible to take input credit of GST paid to the supplier.

For any further queries or assistance with regard to GST or any other business related matter, please contact the team of Business Suvidha (info@businesssuvidha.com)

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