Eligibility to opt for Composition Scheme under GST

Author
By Sakshi Shah on February 18, 2019

Composition Scheme is a voluntary and optional scheme with less compliance for taxpayers who are required to take a compulsory registration under GST.

What is Composition Scheme under GST

Who can opt for Composition Scheme under GST?

If the aggregate turnover of business during the financial year does not exceed Rs.1.5 Crore for goods (Rs.75 lacs for special category states) and Rs.50 lacs for services, it can avail the benefit of composition scheme u/s 10 of the GST Act.

Following points must be noted:

  • Aggregate Turnover is the sum of taxable sales, exempt sales, exports and inter-state sales. It excludes the amount of tax and purchases on which tax is payable under reverse charge.
  • Aggregate Turnover is calculated on all India basis for all the business working on the same PAN.
  • Business having the same PAN but multiple registrations i.e. GSTINs for different states can opt for Composition Scheme for one GSTIN and not for others.
  • Special category states include  Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh

Who cannot opt for Composition Scheme under GST?

  1. Business selling services cannot opt for composition scheme. However, restaurant service providers can opt for composition scheme
  2. Business making inter-state sale of taxable goods cannot opt for composition scheme. However, business making inter-state sale of taxable services can opt for the composition scheme
  3. Business selling non-taxable goods
  4. E-commerce suppliers i.e. business selling goods through an e-commerce operator [Read More: What is the impact of GST on an E-Commerce Supplier?]
  5. Manufacturer of tobacco, pan-masala or ice-cream
  6. CTP i.e. Casual Taxable Person – person who occasionally sells goods or services from the state where he does not have a fixed place of business
  7. NRTP i.e. Non-Resident Taxable Person – person who occasionally sells goods or services from India and does not have a fixed place of business in India

When can a seller opt for Composition Scheme?

Opt for Composition Scheme
Opt for Composition Scheme
Should I register under the Composition Scheme in GST?