What is Composition Scheme under GST?

author portrait

Sakshi Shah

Aggregate Turnover
Bill of Supply
Composition Scheme
GST
GSTR-4

Composition Scheme is a voluntary and optional scheme with simpler returns and lesser compliance under GST. A business should take a Compulsory Registration under GST if it’s aggregate turnover in a financial year exceeds the threshold limit opted by the respective states. Such business can avail the benefit of Composition Scheme u/s 10 of the GST Act.

Eligibility to opt for Composition Scheme under GST
Read about which taxpayers can opt for Composition Scheme
Read More
Eligibility to opt for Composition Scheme under GST
Read about which taxpayers can opt for Composition Scheme
Read More

Features of Composition Scheme under GST

  1. If the Aggregate Turnover of business is up to Rs.1.5 Cr for goods and restaurant services (Rs.75 lacs for special category states) or Rs.50 lacs for other services during a financial year, it can opt for Composition Scheme.
  2. Taxpayer cannot collect GST from its customers on the sale of goods or services.
  3. Taxpayer cannot claim an Input Tax Credit of the GST paid on the purchase of goods or services.
  4. FY 2019-20 onwards, a Composite Dealer should file GSTR-4 on an annual basis on or before 30th April from the end of the financial year. They should now pay tax on quarterly basis under Form GST CMP-08. Earlier up to FY 2018-19, GSTR-4 was filed quarterly or before the 18th of the month from the end of a quarter. A Composite Dealer should also file an annual return GSTR-9A on or before 31st December from the end of financial year.
  5. A composite dealer needs to pay tax at a fixed rate on its turnover. The tax rate is either 1%, 2%, 5% or 6% based on the nature of the business.
  6. Business should mention ‘composition taxable person’ on its notice boards and signboards.
  7. The taxpayer should mention ‘composition taxable person’ on the Bill of Supply issued to its customers.
  8. Any business that opts for composition scheme without meeting the prescribed conditions would be subject to a penalty by the GST department.
Should I register under the Composition Scheme in GST?
Check whether taxpayer should opt for composition scheme or not based on the nature of business
Read More
Should I register under the Composition Scheme in GST?
Check whether taxpayer should opt for composition scheme or not based on the nature of business
Read More

FAQs

How do I opt for Composition Levy if I am already registered as a regular taxpayer?

To opt for Composition Scheme on GST Portal, follow these steps:
1. Log in to GST Portal
2. Go to Services > Registration > Application to Opt for Composition Levy
3. Fill the form with required details and submit

Can I opt for Composition Levy, if I am a service provider?

Earlier, the benefit of the Composition Scheme was not available to taxpayers selling services except restaurant services. However, FY 2019-20 onwards, the benefit of the Composition Scheme was extended to taxpayers selling other services. If the aggregate turnover is up to Rs. 50 lacs, a service provider can opt for Composition Scheme and pay GST at the rate of 6%.

How do I withdraw from Composition Levy on the GST Portal?

To withdraw from Composition Scheme on GST Portal, follow these steps:
1. Log in to GST Portal
2. Go to Services > Registration > Application for Withdrawal from Composition Levy
3. Fill the form with required details and submit

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    Close Bitnami banner
    Bitnami