A taxpayer whose aggregate annualturnover 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.
Thecomposition dealer enjoys high liquidity as taxes are at a lower rate(1% -6%) but no Input Tax Crediton 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
