A taxpayer with a revenue of less than Rs 1.5 crore can choose the GST Composition Scheme (Rs. 75 lacs for the North Eastern States and Himachal Pradesh). In addition, the turnover cap for services is Rs. 50 lacs. It is important to take GST consultation for a better decision. Keep reading the blog to learn more.
Requirements for Choosing a Composition Scheme
The following conditions are in order to choose the Composition Scheme:
– A composition system merchant is not eligible for an input tax credit, and he or she may not sell non-taxable items such as alcohol, gasoline, or diesel. Furthermore, in the case of transactions carry under the Reverse Charge Mechanism. Moreover, the tax must be paid at regular rates. Different firms must be collectively registered under the composition scheme, if appropriate.
– The words “Composition Taxable Person” show on every notice or signboard at a business location. In addition, every bill of supply must include the words “Composition Taxable Person.”
– In addition, the manufacturer or seller can now provide services. Furthermore, it is for a maximum of 10% of turnover or Rs. 5 lacs, whichever is larger.
Who Is Ineligible To Use A Composition Scheme?
GST Composition Scheme cannot be chosen by anybody who is/makes any supply of products. These products are not taxed under the GST Act, as well as inter-state outward deliveries of goods and supplies. This supply is through internet commerce operators that are required to collect tax under section 52.
– It is also a producer of recognized commodities such as ice cream, pan masala, and tobacco.
– a casual trader – additionally, a Non-Resident Foreign Taxpayer – an Input Service Distributor (ISD) – additionally, a TDS Deductor/Tax Collector
When do you have the option to participate in this program?
To take advantage of the GST composition scheme, you must submit an online application to the tax authorities to select the Composition Levy. Furthermore, taxpayers who are eligible for this program classify the following categories:
New Taxpayers: Anyone who require to register under the GST Act. In addition, he must file his choice to pay the composition amount after the specified day. In addition, in Form GST REG-01, there is a section for New Registration. So you need to get expert GST consultation.
Existing Taxpayers: Anyone who registers as a regular taxpayer under goods and service tax registration must submit an application. In addition, via the GST Portal, fill out Form GST-CMP-02 to opt for Composition Levy. Furthermore, prior to the start of the financial year for which the aforementioned section’s choice to pay tax exercise.
Is it possible for a composition dealer to issue an invoice?
The composition dealer is unable to issue an invoice under this arrangement. This is due to the fact that the dealer is unable to charge tax to its clients. Furthermore, composite dealers are responsible for their own taxes and are not eligible for an input tax credit. As a result, these dealers are able to issue bills of supply.
In addition, at the top of the bill of supply, the dealer writes “composition taxable person, not eligible to collect tax on supplies.”
Payment of GST under the Composition Scheme
As previously noted, the composition dealer is unable to charge its customers and must pay taxes on its own. In addition, when a composition dealer pays GST, he or she must pay: – GST on supplies made – Tax under reverse charge
– In addition, there is a tax on purchases that don’t take registration for a certain category of items.
Composition Scheme Returns To File
The following are the GST returns that file under the composition scheme:
– CMP-08: Quarterly statement due by the 18th of the month following the quarter’s end.
– GSTR-4: GST Returns fill yearly by April 30th of the next fiscal year, beginning in 2019-20.
– In addition, GSTR-9A: Annual GST Return is due by December 31st of the following fiscal year.
FAQs
If I am currently a regular taxpayer, how do I apply for the Composition Scheme?
The following actions must complete on the GST portal to select the Composition Scheme:
1. Go to the Taxpayers’ Interface and log in.
2. In addition, go to Services > Registration > Composition Levy Application.
Furthermore, fill out the form according to the instructions and submit it. In case if there is any issue take GST consultation.
Is it necessary for a composition dealer to keep extensive records for GST purposes?
No, for GST purposes, the composition dealer no requires to keep records.