Composition Scheme in GST

Composition Scheme

ü  Opted by any Taxpayer whose turnover is less than Rs. 1.5 Crores  (Rs.75 Lakhs in case of North Eastern States).

ü  A simple and easy scheme under GST for taxpayers.

ü  Taxpayers who opted Composition scheme can get rid of tedious GST formalities

ü  Pay GST at a fixed rate of turnover.

ü  Service Providers are not eligible for Composition Scheme.  But Restaurants are eligible.

ü  GST rates under Composition scheme are as follows.

Type of Business	CGST	SGST	Total
Manufacturer and Trader	0.5 %	0.5%	1 %
Restaurants	2.5%	2.5%	5 %

Who cannot opt for Composition Scheme

ü  Supplier of services

ü  Manufacturer of ice cream, pan masala, or tobacco

ü  Businesses which supply goods through an e-commerce operator

ü  A dealer, who carrying out Inter-State transactions.

Advantages:

ü  Lesser compliance i.e., returns, maintaining books of record, Issuance of invoices.

ü  Limited tax liability.

ü  High liquidity as taxes are at a lower rate i.e., 5% or 1%.

Disadvantages:

ü  A limited territory of business. The dealer is barred from carrying out inter-state transactions

ü  No Input Tax Credit available to composition dealers

ü  The taxpayer will not be eligible to supply exempt goods or  goods through an e-commerce portal.

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