{"id":9874,"date":"2020-06-02T11:16:56","date_gmt":"2020-06-02T05:46:56","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=9874"},"modified":"2024-12-17T17:22:18","modified_gmt":"2024-12-17T11:52:18","slug":"composition-scheme-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/","title":{"rendered":"Composition Scheme under GST- The Next Big Thing"},"content":{"rendered":"\n<p class=\"has-drop-cap\">GST council has introduced a\ncomposition scheme under GST to <strong><em>reduce the costs for small taxpayers<\/em><\/strong>,\nalong with <strong><em>simplifying the compliance process<\/em><\/strong>. Small businesses got relief\nand feel free from the burden of compliance provisions after the emergence of\ncomposition scheme in the world of taxes. There is a negligible requirement of\nmaintaining records since the GST composition scheme assures greater\ncompliance.<\/p>\n\n\n\n<p>When GST came into the picture,\nbig businesses were happy, but small businesses were not comfortable with the\nGST compliance procedures. Thus, in order to provide a sense of comfort to\nsmall businesses, the GST composition scheme got introduced in which the\nindividuals need to pay their <strong><em>taxes at minimum rates<\/em><\/strong> depending on\ntheir actual turnover.<\/p>\n\n\n\n<p>All those taxpayers whose turnover is below the mark of <strong><em>Rs 1.5 crore<\/em><\/strong> can opt for <strong><em>this composition scheme under GST<\/em><\/strong>. The <strong><em>limit is Rs 75 lakh<\/em><\/strong> for <strong><em>Himachal Pradesh<\/em><\/strong> as well as the <strong><em>North Eastern States of India<\/em><\/strong>. By opting for this scheme, they will be able to get rid of tiresome formalities concerning GST and would pay goods and service tax at a fixed rate of turnover. In <strong><em>section 10 of the CGST Act, 2017<\/em><\/strong>, CBIC has <strong><em>increased the threshold limit<\/em><\/strong> for availing the <strong><em>GST composition scheme<\/em><\/strong> to <strong><em>Rs 1.5 crore from the previous limit Rs 1 crore.<\/em><\/strong><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Conditions_for_Availing_Composition_Scheme_under_GST\" >Conditions for Availing Composition Scheme under\nGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Composition_Scheme_under_GST-_Key_Forms\" >Composition Scheme under GST- Key Forms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Eligibility_for_the_Composition_Scheme_under_GST\" >Eligibility for the Composition Scheme under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Non-Applicability_of_Composition_Scheme_under_GST\" >Non-Applicability of Composition Scheme under\nGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Tax_Rates_Applicable_under_the_GST_Composition_Scheme\" >Tax Rates Applicable under the GST Composition\nScheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Composition_Scheme_under_GST_Filing_of_Returns\" >Composition Scheme under GST: Filing of Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#Composition_Scheme_under_GST-_Latest_Updates_2020\" >Composition Scheme under GST- Latest Updates\n2020<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/composition-scheme-under-gst\/#In_the_Nutshell\" >In the Nutshell<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_Availing_Composition_Scheme_under_GST\"><\/span>Conditions for Availing Composition Scheme under\nGST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Opting for composition scheme under GST is possible by fulfilling the following conditions-<\/p>\n\n\n\n<ul>\n<li>Any <strong><em>dealer<\/em><\/strong> opting for <strong><em>composition scheme<\/em><\/strong> <strong><em>can&#8217;t\nclaim an input tax credit<\/em><\/strong>.<\/li>\n\n\n\n<li>The taxpayer would pay the tax at <strong><em>standard goods and service tax\nrates<\/em><\/strong> for transactions under the RCM.<\/li>\n\n\n\n<li><strong><em>No inter-state supply<\/em><\/strong> of goods\nshould take place.<\/li>\n\n\n\n<li><strong><em>GST exempted goods<\/em><\/strong> shouldn&#8217;t\nget supplied by the dealer.<\/li>\n\n\n\n<li>If a taxable person is involved in <strong><em>various sections of businesses<\/em><\/strong>\nlike <strong><em>groceries,\ntextiles<\/em><\/strong>, etc. under the same PAN, then either they need to\ncollectively opt for the composition scheme or out of the same scheme.<\/li>\n\n\n\n<li>It is the duty of the taxpayer to demonstrate the words &#8220;<strong><em>composition\ntaxable person<\/em><\/strong>&#8221; on each bill of supply that has got issued from his\nend.<\/li>\n\n\n\n<li>The taxpayer needs to specify the words &#8220;<strong><em>composition\ntaxable person<\/em><\/strong>&#8221; on every signboard as well as a notice at the\nbusiness site.<\/li>\n\n\n\n<li>Trader or manufacturer can move ahead and supply services to the\nextent of <strong><em>10% of turnover<\/em><\/strong>, <strong><em>or Rs 5 lakhs<\/em><\/strong>, the higher one among\nthe both. Applicability of this scheme started on <strong><em>Feb 1st, 2019.<\/em><\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Composition_Scheme_under_GST-_Key_Forms\"><\/span>Composition Scheme under GST- Key Forms<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under current rules of GST, individuals along with businesses that are composition scheme registered should fill out different essential forms-<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"503\" height=\"562\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-6.png\" alt=\"Composition Scheme under GST - Forms\" class=\"wp-image-9875\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-6.png 503w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-6-269x300.png 269w\" sizes=\"(max-width: 503px) 100vw, 503px\" \/><\/figure><\/div>\n\n\n<p><strong><em>*Besides this, there might be a requirement for other forms for applying or operating under the composition scheme of GST.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_for_the_Composition_Scheme_under_GST\"><\/span>Eligibility for the Composition Scheme under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The taxable turnover for the <em>service provider<\/em> is up to <em>Rs 50 lakh for composition scheme<\/em> and would have to pay <em>6 percent GST<\/em>.<\/li>\n\n\n\n<li>The taxable turnover for <em>manufacturers<\/em>, as well as <em>traders<\/em> of <em>North-eastern states and Himachal Pradesh,<\/em> is up to <em>Rs 75 lakh<\/em>.<\/li>\n\n\n\n<li>The taxable turnover for <em>traders or manufacturers<\/em> is up to <em>Rs 1.5 crore.<\/em><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-Applicability_of_Composition_Scheme_under_GST\"><\/span>Non-Applicability of Composition Scheme under\nGST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following people got <strong><em>exclusions are<\/em><\/strong>&#8211;<\/p>\n\n\n\n<ul>\n<li><em>Non-resident taxable person<\/em><\/li>\n\n\n\n<li>Businesses engrossed in <em>inter-state supplies<\/em><\/li>\n\n\n\n<li><em>Casual taxable person<\/em><\/li>\n\n\n\n<li>Manufacturer of <em>ice cream<\/em><\/li>\n\n\n\n<li>Manufacturer of <em>pan masala and tobacco<\/em><\/li>\n\n\n\n<li><em>Businesses supplying goods<\/em> via an e-commerce operator<\/li>\n<\/ul>\n\n\n\n<ol>\n<li>Earlier, service providers besides restaurant services didn&#8217;t have the permission to get registered under the GST composition scheme. After the <strong><em>32nd GST council meeting in January 2019<\/em><\/strong>, service sector businesses other than restaurant services got allowed to register under the GST composition scheme.<\/li>\n\n\n\n<li>Registered individuals and entities are not allowed to involve in the interstate supply of goods along with services. These businesses can <strong><em>procure goods and services from those suppliers<\/em><\/strong> that can <strong><em>perform interstate operations<\/em><\/strong> under the <strong>GST Act<\/strong>.<\/li>\n\n\n\n<li>Therefore, businesses or individuals registered under the composition scheme of GST can buy goods or services from outside the boundaries of their state but cannot sell goods as well as services to businesses and even consumers outside the state.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\">Composition Scheme Billing<\/h3>\n\n\n\n<ul>\n<li>A dealer cannot issue a <a href=\"https:\/\/corpbiz.io\/gst-registration\" title=\"GST Registration\"><strong>goods and service tax<\/strong><\/a> invoice as per the rules of the composition scheme as the tax liability is on the<strong> taxpayer<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Taxpayer\"><strong>[1]<\/strong><\/a><\/sup>.<\/li>\n\n\n\n<li>A dealer should issue a bill of supply as per the composition scheme rules under GST. It is mandatory for every bill to mention &#8220;<strong><em>composition taxable person<\/em><\/strong>, ineligible to receive tax on supplies.&#8221;<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/\">GST on Legal Services in India: Taxability of Legal Services under GST<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Rates_Applicable_under_the_GST_Composition_Scheme\"><\/span>Tax Rates Applicable under the GST Composition\nScheme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>At the time of registering for\nGST composition, a fixed composition tax rate is applicable to your business\nturnover. The applicable GST rates under composition scheme-<\/p>\n\n\n\n<ul>\n<li>1% GST is applicable for the manufacturers as well as traders of goods. This 1% GST includes- 0.5% CGST and 0.5% SGST.<\/li>\n\n\n\n<li>5% GST is applicable for those restaurants that don&#8217;t serve alcohol. The 5% GST includes- 2.5% CGST and 2.5% SGST.<\/li>\n\n\n\n<li>6% GST is applicable to other service providers. The 6% GST encompasses- 3% CGST and 3% SGST.<\/li>\n<\/ul>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Business Type<\/strong>\n  <\/td><td>\n  <strong>Total GST<\/strong>\n  <\/td><td>\n  <strong>CGST<\/strong>\n  <\/td><td>\n  <strong>SGST<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Manufacturer &amp; Traders of Goods<\/strong>\n  <\/td><td>\n  \n  1.0%\n  <\/td><td>\n  \n  0.5%\n  <\/td><td>\n  \n  0.5%\n  <\/td><\/tr><tr><td>\n  <strong>Restaurants not serving (Alcohol)<\/strong>\n  <\/td><td>\n  \n  5.0%\n  <\/td><td>\n  \n2.5%\n  <\/td><td>\n  \n  2.5%\n  <\/td><\/tr><tr><td>\n  <strong>Service Providers<\/strong>\n  <\/td><td>\n  6.0%\n  <\/td><td>\n 3.0%\n  <\/td><td>\n  3.0%\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Composition_Scheme_under_GST_Filing_of_Returns\"><\/span>Composition Scheme under GST: Filing of Returns<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Form GSTR &#8211; 4- To file a quarterly return by 18th of the month after the quarter-end<\/li>\n\n\n\n<li><strong><em>Form GSTR- 9A<\/em><\/strong>&#8211; Annual <a href=\"https:\/\/corpbiz.io\/gst-return-filing\" title=\"GST Return Filing\"><strong>filing of GST return<\/strong><\/a> by <strong><em>31st December<\/em><\/strong> of the proceeding financial year<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Composition_Scheme_under_GST-_Latest_Updates_2020\"><\/span>Composition Scheme under GST- Latest Updates\n2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The time limit for ordinary and registered taxpayers who want to opt-in the GST composition scheme for the financial year 2020-21 got extended up to <strong><em>June 30, 2020.<\/em><\/strong> It is applicable for taxpayers registered under section 10 of the CGST Act along with the taxpayers opting for the scheme.<\/li>\n\n\n\n<li>The time limit for filing the <strong><em>ITC-03 form<\/em><\/strong> got extended till <strong><em>July 31, 2020<\/em><\/strong>.<\/li>\n\n\n\n<li>The time limit for filing <strong><em>GSTR-4 yearly returns<\/em><\/strong> for the financial year 2019-20 by the composition dealers got extended till <strong><em>July 15, 2020<\/em><\/strong>.<\/li>\n\n\n\n<li>Till <strong><em>July 7, 2020<\/em><\/strong>, in <strong><em>Form CMP-8<\/em><\/strong>, dealers can make the submission for challan-cum-statement for the Jan-Mar 2020 quarter.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_the_Nutshell\"><\/span>In the Nutshell<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The government introduced the <strong><em>c<\/em><\/strong><em><strong>omposition scheme under <\/strong><\/em><strong>Goods and service tax<\/strong> as an optional method of the tax levy to bring a reduction in the compliance costs for small taxpayers, along with simplifying the compliances. It has lessened the requirement of maintaining adequate records. This composition scheme turned out extremely beneficial for small taxpayers. We at <em><a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a><\/em><strong><em> <\/em><\/strong>are ready to assist you all the time with respect to any help on GST.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/gst-on-food-services-and-food-items\/\">GST on Food Services and Food Items: All that you need to Know\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>GST council has introduced a composition scheme under GST to reduce the costs for small taxpayers, along with simplifying the compliance process. Small businesses got relief and feel free from the burden of compliance provisions after the emergence of composition scheme in the world of taxes. There is a negligible requirement of maintaining records since [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":9880,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[617],"acf":{"service_id":"68"},"authorName":"Margesh Rai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2024\/03\/Margesh.png","authorDescription":"With 10+ years of creative writing experience and 500+ blogs and thought leadership articles to his credit, Margesh Rai has left a significant impact in the field of content marketing. A published author and poet, Margesh Rai has experience writing for 20+ segments, such as Legal, Fintech, SAAS, Dairy, Real Estate, Hospitality, Recruitment, Sustainability, etc.","postViews":10564,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9874"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=9874"}],"version-history":[{"count":22,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9874\/revisions"}],"predecessor-version":[{"id":67912,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9874\/revisions\/67912"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/9880"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=9874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=9874"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=9874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}