What is the tax rate under Composition Scheme?
Business registered under composition scheme cannot collect GST on sales made to its customers. It cannot claim the input tax credit of GST paid on purchases of goods and services. A composite dealer needs to pay GST to the government at a prescribed rate determined on the nature of its business.
Here are the prescribed rates for different categories of registered suppliers under Composition Scheme:
|Nature of Business||Item Type||Total||CGST||SGST|
|Restaurants not serving alcohol||Services||5%||2.5%||2.5%|
|Other Services (effective from 1st April 2019)||Services||6%||3%||3%|
- A composite dealer should pay two kinds of taxes:
- Tax on Sales – to be paid on sales at prescribed rates as per the above table
- Tax on Purchase – to be paid on purchases falling under reverse charge mechanism (RCM)
- The prescribed tax rate is calculated on the aggregate turnover in a state or union territory.
- A composite dealer must pay CGST and SGST at the prescribed rate on his turnover. He shall not pay IGST.
Mr.A is a trader registered under Composition Scheme. Sales Turnover from 01.04.2018 to 30.06.2018 is Rs.10,00,000. He is liable to pay CGST = Rs.5,000 (Rs.10,00,000*0.5%) and SGST = Rs.5,000 (Rs.10,00,000*0.5%)
- TXOS – TXOS i.e. Tax on Outward Supplies means the GST on sales of goods and services. It is must be paid while filing GSTR-4 of the relevant quarter
- Tax can be paid by creating a challan on the GST Portal
- A composite dealer cannot issue Tax Invoice to its customers. He must issue a Bill of Supply and cannot charge GST.
1. Can I save the Application to Opt for Composition Levy?
Yes. The application can be saved for up to 15 days from the date of initiation. Saved applications can be accessed using the My Saved Applications option on the Taxpayers’ Interface.
2. What are the returns to be filed by a Composition taxpayer?
Composition taxpayer needs to pay tax and furnish a statement, every quarter in FORM GST CMP-08. Further he/she is also required to furnish a return for every financial year in FORM GSTR-4.