All Differences Explained Between Regular GST & Composition Schemes

You should know if the turnover of your business is not greater than INR 1.5 Crores

The composition scheme of tax payment is meant for those small businesses whose turnover of taxable goods is not greater than INR 1.5 Crores. In such cases, the burden of GST must be borne by the seller. The rates are as follows:

• 1% of such turnover by Traders
• 2% by Manufacturers
• 5% for Restaurants
• 6% for Service Providers

It is worth mentioning here that the composition taxpayer cannot issue a tax invoice. The reason being the burden of tax must be borne by the dealer out of pocket. Consequently, A composition Dealer is not allowed to take back the GST from the customers. In the past Service Providers could not opt for Composition Scheme Get to know about the GST composition scheme for small businesses. Also, we included its key features, registration process, eligibility, and filing returns. Read more but in Budget 2019, the Government issued a notification for Service providers whose turnover is up to Rs. 50L can opt for Composition Scheme.

The Composition Scheme is very supportive for small businesses. As compared to the regular GST scheme, the taxpayers opting for the Composition scheme are required to file a total of 5 GST Returns:

• Four Quarterly GSTR in the form of CMP-08 &
• One annual GSTR in a year in the form of GSTR-4

Composite scheme holders cannot claim the Input Tax Credit A complete guide for understanding the basics of input tax credit and it calculation with detailed examples under GST (Goods and Services Tax) India. Read more on any purchases and are not required to maintain the books of accounts.

Pros of Composition Scheme:

• Lower Tax Payment i.e. 1%, 2%, 5%, 6%
• Lower Tax & Higher Liquidity
• Less Compliance involved for those who can use the Composition Scheme

Cons of Composition Scheme:

• Cannot recover the Tax Payment
• Inter-State sales are not permitted

A Glimpse of Regular GST or No Scheme?

A Registered Person, whose aggregate turnover in the preceding financial year was not more than Seventy-Five (75L) Lakh Rupees for specified states can opt for this scheme. Other than the restaurant sector, The taxpayers related to the Service industry can also choose this scheme. It has multiple tax rates including 5%, 12%, 18% and 28%.

• At present, GSTR 3B GSTR 3B is a consolidated return filing form under the goods and services tax regime. The taxpayers are required to file the GSTR 3B including all the tax details of GSTR 1, GSTR 2 in a single form as per the instructions of the GST Council.. Read more and GSTR 1 are required to be filed as per the normal scheme
• Exception: The turnover limit of the following states is Rs. 75L
• Manipur, Arunachal Pradesh, Mizoram, Meghalaya, Nagaland, Tripura, Sikkim, and Uttarakhand

Regular taxpayers can get back input tax credit of GST that is paid on the purchase of goods or services or both.

How to Switch from a Regular GST to Composition GST?

For opting into a composition scheme, taxpayers are required to file CMP-02. The scheme will be effective from 01/04/2020