GST Composition Scheme !

The GST law has introduced a simpler scheme for taxpayers where taxpayers can pay tax at a fixed rate of turnover. This scheme is applicable to those whose turnover is not exceeding 1.5 crores.

Eligibility to opt the scheme:

Manufacturer or Trader or Supplier of food service provider can opt for composition scheme if:

• Turnover is less than 1.5 crore* during previous year.
• A person opting Composition scheme is allowed to supply services upto 10% of previous year Turnover or 5 Lakhs whichever is higher.

*Turnover limit is 75 lakhs if taxpayer is from Manipur, Mizoram, Tripura, Nagaland, Uttarakhand, Sikkim, Meghalaya, Arunachal Pradesh.

Other Service Providers are also allowed to register under Composition Scheme only if

1. Turnover during Previous year is not more than 50 Lakhs.
2. No interstate supply.

If at any time during the year the turnover crosses the threshold limit then such taxpayer shall opt out of the composition scheme and will be liable to pay tax at normal rates from the date of conversion.

Exception for taxpayers to opt this Scheme:

• Manufacturer of Pan masala, ice cream, edible ice, aerated waters, tobacco and tobacco products, bricks and roofing tiles.
• Casual taxable person and Non-resident taxable person.
• Pearson dealing in Non-taxable supplies.
• Supplier of goods/ services through E-commerce operator.
• Person making Inter-state supply.
• Service providers other than 1. Restaurant service provider and 2. whose turnover is upto allowed limit as mentioned below.

GST rates under Composition scheme:

Conditions for availing Composition scheme:

• Taxpayer cannot claim Input Tax Credit.
• Taxpayer should write ‘Composite Taxable Person’ on all place of business and all notices.
• Mention ‘Composite Taxable Person’ while issuing bill of supply.
• Should pay tax out of there expense and cannot charge it to customer.
• If there is any transaction of Reverse Charge Mechanism then the taxpayer will have to pay tax at normal rate.