GST has been implemented in India which has brought new regime of business compliance in India. The government has introduced Composition Scheme to simplify the compliances for the start-ups and Small and Medium Enterprises (SMEs) under GST. The compliances are more than earlier under GST so there are some exemptions given under GST to the small businessman.
Under Composition Scheme of GST, a taxpayer will be required to file summarized returns on a quarterly basis, instead of three monthly returns as applicable for normal business. This scheme can be availed by that taxpayer who have an annual turnover of less than 75 lakh and do not do interstate supplies. Also under the composition scheme the taxpayers are not required to maintain detailed records as required in the case of normal taxpayers.
Eligible for Composition Scheme :
This scheme can be opted by following tax payers:
The turnover should be below Rs 75 lakh. This limit is Rs 50 lakh for states like Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Himachal Pradesh. Following are the one who cannot opt for composition scheme:
But this scheme is not available to service provider other than restaurants. If their turnover exceeds Rs 20 lakh then the service providers have to apply for GST Registration and comply with regular GST Return Filings monthly basis. The threshold limit will not apply when they are engaged in interstate supplies or are listed on an e-commerce website.
Rates of tax for the scheme
These are the following rates for tax (an aggregate of CGST & SGST Rates under the Composition Scheme:
|S. No.||Taxpayer||CGST Rate||SGST Rate||Total Rate|
One can migrate from existing Tax scheme to GST Composition Scheme or if they opted for VAT composition scheme then you will still be eligible for registering as regular GST Taxpayer. One can file their returns under the composition scheme in the Form GSTR-4 on a quarterly basis and an annual return in form GSTR-9A.
One has to fulfil the following conditions to avail credit on input at time of transition from composition scheme to normal scheme:
Restrictions on the Composition Scheme
There are some restrictions on the taxpayer which opt for the composition scheme, some of them are:
The composition scheme is for some benefit for the small retailers who are operating in a single state only. It may appear to be restrictive to some taxpayers but will ultimately benefit them as it has been introduced for their benefit only.