Composition Scheme is a voluntary and optional scheme with less compliance for taxpayers who are required to take compulsory registration under GST. The Taxpayer can apply for Registration under Composition Scheme on the GST portal. Read about the eligibility to opt for Composition Scheme under GST – who can opt for it and who cannot opt for it.
If the aggregate turnover of business during the financial year does not exceed Rs.1.5 Crore for goods and restaurant services (Rs.75 lacs for special category states) and Rs.50 lacs for other services, it can avail the benefit of composition scheme u/s 10 of the GST Act.
Following points must be noted:
Check the eligibility of seller of goods or services to opt for Composition Scheme under GST.
Sale of Goods
|Taxable Goods||Intra-State Sale||Eligible|
|Taxable Goods||Inter-State Sale||Not Eligible|
|Non-Taxable Goods||Intra-State Sale||Not Eligible|
|Non-Taxable Goods||Inter-State Sale||Not Eligible|
Sale of Services
|Taxable Services||Intra-State Sale||Eligible|
|Taxable Services||Inter-State Sale||Eligible|
|Non-Taxable Services||Intra-State Sale||Not Eligible|
|Non-Taxable Services||Inter-State Sale||Not Eligible|
No. A taxable person opting to pay tax under the composition scheme is out of the credit chain. He/she cannot claim input tax credit on inward supplies. When he switches over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed.
If a taxable person has paid tax under the composition scheme without being eligible, taxpayer would be liable to penalty. Provisions of section 73 or 74 shall be applicable to determine tax and penalty.
a. Trader of Goods = 1% ( CGST 0.5% & SGST 0.5%)
b. Manufacturer of Goods = 2% (CGST 1% & SGST 1%)
c. Restaurant Services = 5% (CGST 2.5% & SGST 2.5%)
d. Other Services = 6% (CGST 3% & SGST 3%