Composition Scheme under GST: The composition scheme under the GST regime is a method of levy of tax designed for small taxpayers whose turnover is up to Rs. 1.5 crore. It is an optional scheme and not all taxpayers are eligible to opt for this.The basic eligibility criteria to opt for Composition scheme is to small taxpayers whose aggregate turnover in the preceding financial year did not cross Rs. 1.5 crore. Following is a list of persons who cannot avail the Composition Scheme.
Composition Scheme Under GST
Please Note - The threshold for composition scheme will be increased to Rs. 1.5 crore (from earlier 1 crore)
Who cannot opt for Composition SchemeThe following people cannot opt for the scheme:
- Taxpayer supplying exempt supplies.
- Supplier of services other than restaurant related services
- Manufacturer of ice cream, pan masala, or tobacco
- Casual taxable person or a non-resident taxable person
- Businesses which supply goods through an e-commerce operator
GST Council 23rd Meeting Highlights (10-11-2017)
- i. Uniform rate of tax @ 1% under composition scheme for manufacturers and traders (for traders, turnover will be counted only for supply of taxable goods). No change for composition scheme for restaurant.
- ii. Supply of services by Composition taxpayer upto Rs 5 lakh per annum will be allowed by exempting the same
- iii. Annual turnover eligibility for composition scheme will be increased to Rs 1.5 crore from the present limit of Rupees 1 crore under the law. Thereafter, eligibility for composition will be increased to Rs. 1.5 Crore per annum.
- iv. The changes recommended by GST Council at (iii) above will be implemented only after the necessary amendment of the CGST Act and SGST Acts.
How to Opt Composition Scheme?
|Various Scenarios of opting the scheme||How to opt||Effective date for Composition|
|The taxable person migrating to GST from previous regime||Can opt by filing FORM GST CMP-01 not later than 30 days or such further period as may be extended, from the Appointed date.||Effective from Appointed date|
|Person taking new registration under GST||Can opt at the time of obtaining registration in Part B of FORM GST REG-01||Effective form the date of registration|
|A registered person under GST opting for composition scheme||May opt by filing FORM GST CMP-02 prior to commencement of FY for which option is exercised||Effective from the beginning of the financial year|
|The taxable person migrating to GST from previous regime and Person taking new registration under GST (one time) but opting for Composition Scheme after the appointed date or his date of registration||By filing intimation in FORM GST CMP-02||Effective from the first day of the month immediately succeeding the month in which he files an intimation|
(1) Who can opt for composition Levy?A registered person whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees may opt to pay, in lieu tax at the normal rates, tax at such rate as prescribed under composition levy
- (a) He is engaged in making supply of services (i.e. service providers)
- (b) He is engaged in making any supply of goods which are not leviable under the GST
- (c) He is engaged in making any inter-state sales of goods
- (d) He is engaged in making any supply of goods through an electronic commerce operator and is required to collect tax at source.
- (e) He is a manufacturer of such goods as may be notified by the Government.
Returns under Composition Scheme:
(3) Rate of tax under composition Levy
|S.No||Nature of activity of supplier||Rate of Tax|
|1||Manufacturers, other than manufacturers of such goods as may be notified by the Government||1%|
|2||Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II||2.50%|
|3||Any other supplier eligible for composition levy||.50%|
- (a) Name, address and GSTIN of the supplier
- (b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year
- (c) date of its issue
- (d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient
- (e) Harmonised System of Nomenclature Code for goods or services
- (f) description of goods or services or both
- (g) value of supply of goods or services or both taking into account discount or abatement, if any; and
- (h) signature or digital signature of the supplier or his authorised representative
Validity and Withdrawal
Benefits of Registering under GST Composition Scheme
- Limited Compliance: Under the composition scheme, the taxpayer is required to furnish quarterly return only, and thus he need not worry on record keeping and can focus on his business more rather than being occupied in compliance procedures.
- Limited Tax Liability: Another benefit of getting registered under the composition scheme is that the tax rate for such taxpayer is nominal under the GST Law.
GST Composition Scheme Formats
|GST CMP-01||Intimation to pay tax under section 10 (composition levy) (Only for persons registered under the existing law migrating on the appointed day)|
|GST CMP-02||Intimation to pay tax under section 10 (composition levy) (For persons registered under the Act)|
|GST CMP-03||Intimation of details of stock on date of opting for composition levy (Only for persons registered under the existing law migrating on the appointed day)|
|GST CMP-04||Intimation/Application for withdrawal from composition Levy|
|GST CMP-05||Notice for denial of option to pay tax under section 10|
|GST CMP-06||Reply to the notice to show cause|
|GST CMP-07||Order for acceptance / rejection of reply to show cause notice|
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