GST Composition Scheme

In order to ease the process of paying GST, the GST Council has established a simple and easy Composition Scheme for small taxpayers. Small taxpayers are simply allowed to pay GST at a fixed rate of turnover. CBIC has increased the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores. As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. In addition, service providers can also opt into the Composition Tax Scheme. The threshold turnover for service providers has to be at least Rs. 50 lakhs to be eligible.

1. No Input Tax Credit can be claimed by an assessee
2. Assessee cannot supply GST exempted goods
3. The assessee is required to pay tax at normal rates for transactions under the Reverse Charge Mechanism
4. If a taxpayer has different segments of businesses under the same PAN, they must register all such businesses under the scheme collectively
5. The assessee has to mention the words ‘composition taxable person’ on every notice and bill of supply issued by them

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The GST payment comprises of:

1. GST on supplies made
2. Taxes on reverse charge
3. Tax on purchase from an unregistered dealer The payment has to be made out of pocket for the supplies made.

An assessee is required to file a quarterly return (GSTR-4) by 18th of the month after the end of the quarter. The annual return GSTR-9A has to be filed by 31st December of next financial year.

The demerits of this scheme are:

1. An assessee is not eligible to supply exempt goods or goods through an e-commerce portal
2. No Input Tax Credit is available to composition dealers
3. An assessee is not able to carry out inter-state transactions