GST Composition Scheme (Last date - 31st March 2019 for next F.Y. 2019-20 )

GST Composition Scheme

Composition scheme is a simple scheme under GST that helps small businesses get rid of complicated processes and pay GST at a fixed rate of turnover.

Persons Eligible for Composition 

Scheme ?

• A taxpayer whose Turnover* is below Rs.1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs.75 lakh.
• As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher.
• This amendment will be applicable from the 1st of Feb, 2019. Earlier the limit was up to Rs.5 lakhs.
• This limit will be checked individually for each state.

*Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.

The GST Council in its 32nd Meeting introduced A new composition scheme for services sector with turnover limit of Rs.50 lakhs (whether supplying only goods or mixed supply) and they have to pay GST at 6% of Turnover.

Persons Ineligible for Composition Scheme ?

A person supplying Exempt Supply of goods

Manufacturer of ice cream, pan masala, or tobacco

A person making inter-state supplies

A casual taxable person or a non-resident taxable person

Businesses which supply goods through an e-commerce operator

Mandatory Conditions for availing Composition Scheme ?

The taxpayer must mention the words ‘composition taxable person’ on every signboard displayed prominently at their place of business.

The taxpayer must mention the words ‘composition taxable person’ on every bill of supply issued by him.

·     The taxpayer must mention “composition taxable person, not eligible to collect tax on supplies”  at the top of the Bill of Supply.

The taxpayer must pay tax at normal rates for transactions under the Reverse Charge Mechanism

If a taxable person has different segments of businesses under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.

No Input Tax Credit can be claimed by a dealer opting for composition scheme

The dealer cannot supply GST exempted goods

Last date for Applying under Composition scheme ?

A taxpayer has to file GST CMP-02 with the government. This can be done online by logging into the GST portal.

This intimation should be given at the beginning of every Financial Year by a dealer wanting to opt for Composition Scheme.

Like, GST composition scheme last date for the next F.Y 2019-20 will be 31st of March of the previous financial year i.e. March 31, 2019.

Invoicing Rules for a dealer registered under Composition scheme ?

A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot charge tax from their customers. They need to pay tax out of their own pocket. Hence, the dealer must issue a "Bill of Supply".

Returns to be filed by a Composition dealer ? 

Return Form	Due Date
GSTR-4	by 18th of the month after the end of the quarter
GSTR-9A	by 31st December of next financial year**

 **The due date for filing of annual returns for financial year 2017-18 has been extended to June 30, 2019, according to a Finance Ministry press released as on Dec 22, 2018.

GST rates under Composition Scheme ?

Tax Payer	CGST	SGST	Total
Manufacturers and Traders	0.5%	0.5%	1.0%
Restaurants Service	2.5%	2.5%	5.0%
Other Service Providers	3.0%	3.0%	6.0%

                                                        Thank you

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