Composition Scheme
Composition levy is an alternative method of levy of tax for
small taxpayers whose turnover is up to Rs. 100lakhs/Rs. 75
in case of special category states. Rs. 1.5 Crores
North east states include Assam, Mizoram, Manipur,
Meghalaya, Tripura, Sikkim, Arunachal Pradesh, Nagaland
Himachal Pradesh.
Composition Scheme
The option to pay tax under composition scheme will
have to be exercised for all states.
Aggregate turnover will be computed on the basis of
turnover on an all India basis.
Aggregate turnover will include value of all taxable
supplies, exempt supplies and export made by all
person with same PAN, but would exclude inward
supplies under reverse charge as well as central,
State/Union Territory and Integrated taxes and cess.
Composition Scheme
Eligible persons opting to pay tax under this scheme can
pay tax at a prescribed percentage of his turnover every
quarter: i) Manufacturers ,other than manufacturers of Ice
cream, Pan Masala, Tobacco products - 2% ii) Restaurant
Services – 5%, iii) Traders or any other supplier eligible for
composition levy – 1%.
Persons opting for composition levy will have to pay
tax on quarterly basis before 18 of the month succeeding
the quarter during which the supplies were made.
Composition dealers need to electronically file quarterly
returns in Form GSTR-4 by the 18th of the month
succeeding the quarter.
Composition Scheme – (Sec10)
Notified suppliers like manufacturer of Ice Cream, edible
ice, Panmasala, Tobacco Products cannot opt this scheme.
Casual taxable person or a non-resident taxable person
Businesses which supply goods through an e-commerce
operator.
Suppliers whose aggregate turnover in the preceding
financial year crossed Rs. 100 lakhs.Rs. 1.5 Crores/ 75 Lakhs
Persons making any inter- state outward supplies of goods.
GST Rate for Composition Scheme
Conditions
No Interstate Outward Supply of goods.
Shall not collect tax.
Issue Bill of Supply & Not tax invoice.
No Input Tax Credit to those who purchase from him.
Not engaged in Electronic Commerce.
Not be engaged in Supply in services except Food & Drink
Service.
Write the Words “Composition Taxable Person” on every
sign board etc.
Conditions
Write the words “composition taxable person” on every
notice, sign board etc.
Write the Words “composition taxable person, not eligible
to collect tax” in every bill of supply.
All registered person having the same PAN have to opt for
composition scheme. If one registered person opts for
normal scheme, others become ineligible for composition
scheme.
Any intimation or withdrawal for one unit is applicable to
others units of the same PAN.
Conditions Rs. 1.5 Crores
Option lapses if aggregate turnover exceed Rs. 100 lakhs.
Pay tax at regular rate for purchase from unregistered
dealers.
Shall file quarterly return in GSTR4 on 18th of the month
next to the quarter.
From 2018-19 onwards file GSTCMP – 02 before the starting
of the Financial year.
No need of renewal every year, once availed composition
scheme can continue till crosses 100lakhs.
Rs. 1.5 Crores
Conditions
Where any registered person who has availed of ITC opts
composition scheme shall pay an amount by way of debit in
the electronic credit/cash ledger equivalent to the credit of
in respect of inputs held in stock in form GST- ITC3.
A composition tax payer who ceases that scheme can claim
ITC on input good and capital goods after reducing the tax
paid on such capital goods by 5 percent per quarter of a
year or part thereof from the invoice date in form GST- ITC
01.
Penal Consequences
If a taxable person violates the
condition and is not eligible for
payment of tax under the
Composition scheme.
Liable to pay Tax, Interest and in
addition he shall also be liable to
a penalty equivalent to the
amount of tax payable.
Highlights Rs. 1.5 Crores
Turnover limit is increased to Rs.1 crore from Rs. 75
lakhs.
For special category states limit is increased to Rs. 75
lakhs except Uttaranchal and Jammu & Kashmir.
This facility is available to both Migrated as well as
new users.
Person otherwise eligible for composition scheme but
ineligible due to providing exempt service, are now
eligible for Composition Scheme.
