Composition Scheme under GST- Key Highlights

• A taxpayer whose aggregate annual turnover is below Rs 1.5 crore* can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is Rs 75* lacs.

• The composition dealer enjoys high liquidity as taxes are at a lower rate (1% -6%) but no Input Tax Credit on purchases can be claimed by the composition dealer

• The composition dealer has to issue a Bill of Supply. They cannot issue a tax invoice since they cannot charge tax from the customers

• The dealer can carry out business within the state only. The dealer is barred from carrying out inter-state transactions

• The composition dealers will not be eligible to supply goods through e-commerce portals

• A composition dealer is required to pay tax in a quarterly statement CMP-08 by ~18th of the month after the end of the quarter

• A return in form GSTR-4 has to be filed annually by ~30th April of next financial year

• The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business

• The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him

• The taxpayer still has to pay tax at normal rates for transactions under the Reverse Charge Mechanism and tax on purchases from an unregistered dealer

• To opt for composition scheme a taxpayer has to file GST CMP-02 with the Government

• The following people cannot opt for the scheme
• • Manufacturer of ice cream, pan masala, or tobacco
  • A person making inter-state supplies
  • A casual taxable person or a non-resident taxable person
  • Businesses which supply goods through an e-commerce operator