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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