Table of Contents
Eligibility to opt for Composition Scheme
- Small manufacturing or production units
- Machine Operators
- Truck Operators
- Fruits and Vegetable vendors
- Services based businesses
- Food businesses
- Repair Store
- Suppliers of goods exempted under GST laws
- Casual Taxable Person
- Manufacturer of ice cream, tobacco or pan masala
- Supplier of goods through an e-commerce operator
- Inter-state supply of Goods
- Non-Resident Foreign Taxpayer
- Tax Collector or TDS Collector
- Input Service Distributor
Conditions to opt for GST Composition Scheme
A taxpayer opting for the Composition scheme cannot claim Input Tax Credit (ITC)
The supplier cannot supply goods that are exempted from being taxed under GST
If the taxpayer is paying taxes under the Reverse Charge Mechanism, the taxpayer must pay taxes at the regular rates of GST
In case the taxpayer is conducting diverse business activities under the same PAN, then the taxpayer has to obtain GST registration for all the different business activities under the composition scheme collectively or the taxpayer will have to opt out of the composition scheme.
On every bill of supply issued by the taxpayer, he or she mentions the words "Composition Taxable Person"
Also, the taxpayer has to mention the words "Composition Taxable Person" on every signboard displayed at his or her shop or principal place of business.
According to the Central Goods and Services Tax Act, (Amendment), 2018, a Composition Dealer can supply goods or services up to 10% of the annual turnover or Rs. 5 lakh whichever is higher. The aforesaid amendment was implemented from the 1st February, 2019.
The taxpayer also has the option to voluntarily withdraw from the Composition Scheme at this time on the GST portal by submitting an application. However, a taxpayer may face complications in issuing sale invoices and filing GST returns due to such alterations.
- Reduced tax liability
- Reduced compliances under GST including issuance of invoices, returns, maintenance of books of accounts, etc.
- Availability of higher liquidity with the taxpayer due to low tax burden