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GST - Composition SchemeMeaning-Small taxpayers with an aggregate turnover in a financial year up to [Rs. 50 lakhs] shall be eligible for composition levy. The scheme is, however, optional for the taxpayer. Tax payer needs to present ‘Bill of supply’ instead ‘Tax invoice’ to the tax authorities. Also, tax payers under this scheme do not qualify for ‘Input tax credit’.

Application – Already registered tax payers under GST shall file application on or before 31st March of the previous year in GST regime even though the taxpayer is already covered under composition scheme under VAT law.

Applicability– The scheme is available to all ‘Traders’ and ‘Manufacturers’. The scheme is not applicable to service providers (restaurants are included in the composition scheme).

Non applicability:- The scheme is not applicable to following taxable persons-

(a) Who are Service providers (restaurants are included in the composition scheme) ; or
(b) Who makes any supply of goods which are not leviable to tax under this Act; or
(c) Who makes any inter-State outward supplies of goods; or
(d) Who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or
(e) Who is a manufacturer of such goods as may be notified on the recommendation of the Council;
(f) Whose turnover exceeds Rs. 50 Lakhs.

Rates:- The following rates have been finalized by GST council meeting held on 4th March 2017 under the composition scheme for turnover below Rs.50 lakhs:

·   Small hotels, dhabas and restaurants – 5% (2.5% CGST & 2.5% SGST)
·   Manufacturers – 2% (1% CGST & 1% SGST)
·   Traders – 1% (0.5% CGST & 0.5% SGST)

Returns:– Taxpayers registered under this scheme shall be be required to file returns once every quarter. The details can be enlisted as follows-

·  Form GSTR-4-Quarterly-18th of the following month
·  Form GSTR-4A-Quaterly-Auto Populated.
·  Form GSTR- 9A-Annual-31st of the following fiscal year.

Penalty:-  Wrongful availment of this scheme shall attract all the taxes under the normal scheme plus penalty equivalent to the tax.

By CA. Naveen Arjaria
      CRS Chartered Accountant-Transaction Tax at Rimini Street

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