Composition Scheme Under GST – What Are The Provisions At Present?

For small taxpayers, composition scheme under GST is a doorway to a reduction in compliance costs and tax-tension-free time.

It allows the eligible taxpayers to pay tax at a flat rate every quarter, rather than paying taxes at normal rates every month. Simultaneously, there are certain limitations as well.

Our today’s article will talk in detail about the composition scheme and rules applicable at present –

Who can register himself under composition scheme?

Manufacturers and traders can register themselves if their taxable turnover is upto ₹ 1.5 crores (₹ 75 lakhs in the North Eastern States).

The scheme has been now extended to service providers as well. A service provider can opt for composition scheme if his taxable turnover is upto ₹ 50 lakhs.

However, a manufacturer of ice cream, pan masala or tobacco, a casual taxable person or a non-resident taxable person, a business supplying goods through an e-commerce operator and persons involved in inter-state supplies can’t register themselves under composition scheme.

If a taxpayer is operating several businesses under the same PAN number, either he has to register all of them under composition scheme or opt-out of the scheme altogether.

If one or more of any businesses make him ineligible to opt for composition scheme, he won’t be able to opt for the scheme for other businesses as well.

What are the applicable GST rates?

Following are the GST rates applicable under composition scheme –

For Manufacturers and Traders – 1 percent

For Restaurants (Not Serving Alcohol) – 5 percent

For Service Providers – 6 percent

What is the return and tax payment periodicity for composition taxpayers?

Taxpayers who have opted for composition scheme have to file GST return only once in a year. However, they have to pay the taxes quarterly along with a self-assessed declaration.

The payment of taxes and submission of declaration has to be completed by 18th of the month following a quarter.

You can file GSTR-4 (Composition Return) via SahiGST. Click here to start your free trial and experience the return filing.

What are the provisions related to invoice, records maintenance and availment of the input tax credit?

A composition taxpayer can’t issue “tax invoice”. Instead, he has to issue a bill of supply to the customers/ clients.

He has to mention “Composition taxable person, not eligible to collect tax on supplies” at the top of the bill.

Unlike normal taxpayers, a composition taxpayer is not required to maintain detailed records of stock and financial transactions.

Finally, since a composition taxpayer pays lesser tax than a normal taxpayer, he can’t claim input tax credit of the goods or services bought from other vendors.

What are the provisions at the time of converting from composition scheme to normal tax implications?

A taxpayer can choose to opt-out of the composition scheme and instead pay tax at normal rates along with benefit of availing ITC. In a financial year, a taxpayer can choose between composition and normal scheme only once.

How can SahiGST help in complying with the taxes?

SahiGST is an affordable, effective software for meeting the GST obligations. In few clicks, data can be easily transferred from the accounting or billing software into SahiGST from where taxpayers can file the returns hassle-free.

Also, it sends notifications related to return filing and tax payment dates on the registered mobile number and email ID so a person or tax consultant doesn’t miss out on dates.

So, what are you waiting for? Ride on a smooth GST ride with SahiGST by visiting our website and starting a free trial.