- The threshold limit to become eligible for GST registration under the GST Composition Scheme is 1.5 Crore. However, in case of North-Eastern and hilly states, the threshold limit is Rs.75 lakhs. This suggests that a taxpayer having an annual turnover less than or equal to the prescribed threshold can opt for composition scheme under GST.
- The GST composition scheme can be opted for only when all activities of the business are registered under a single PAN of the business.
- A taxpayer registered under the composition scheme must pay taxes on quarterly basis and also need to file returns in form GSTR-4 quarterly by the 18th of the first month of the next quarter.
- A taxpayer registered under the GST Composition Scheme is not eligible to issue a tax invoice.
- A taxpayer registered under the GST Composition Scheme also cannot claim the Input Tax Credit (ITC) on the purchase of goods
Reduced/Lower Tax Liability
Higher Liquidity available
Level Playing Field
Q1: Can a person opt for a Composition Scheme while making a fresh or new registration under GST?
Yes. A person can opt for composition scheme while making a fresh or new registration under GST by filing form GST REG-01. It will be considered as intimation of payment of taxes under GST composition scheme.
Q2: Can an existing GST registered taxpayer opt for the payment under the composition scheme?
Yes. An existing GST registered taxpayer can opt for the payment under the composition scheme by giving intimation in electronic format in Form GST CMP-02 in the beginning of a financial year.
Q3: Can suppliers engaged in providing services opt for composition scheme?
No. A supplier engaged in providing services cannot opt for a composition scheme. However, there is an exception to the same, if a taxpayer is engaged in restaurant services then he can opt for the composition scheme.
Q4: What is the validity of registration under the GST composition Scheme?
The validity to pay taxes under the composition scheme would sustain so long as the conditions prescribed under Section 10 of the Central Goods and Services Tax Act, 2017 and Rule 3 to 5 of the Central Goods and Services Tax rules, 2017 are being fulfilled.
Q5: Can a person registered under composition scheme supply goods to SEZ (Special Economic Zone)?
No. A person registered under composition scheme cannot supply goods to SEZ (Special Economic Zone). It is to be noted that supplies made to the SEZ are treated as inter-state supply, thus a dealer registered under composition scheme cannot make inter-state supplies and so as supplies to SEZ units.