GST composition scheme was implemented under the respective State VAT Laws with conditions applied on eligibility for the scheme accordingly. GST composition scheme assures greater compliance without the requirement of maintaining records. This system is missing in Service Tax laws.
Latest Update
13th October 2022
- The ICAI has shared the second edition of the handbook on the composition scheme for Chartered Accountants. Read PDF
09th July 2022
- The important message for some composition taxpayers regarding the negative balance removal is that the process has been completed by the government. read more
09th May 2022
- The Maharashtra Authority of Advance Ruling (AAR) has issued the order for the M/s. KPC Projects Ltd. In the order, Shri T.R.Ramnani and other members said the 18% GST has to be paid for the composite supply of construction hospital works. Read More
GST Software Demo for Composite Taxpayers
32nd Council GST Meeting for Composition Traders
- The annual turnover limit increased by GST council to 1.50 Crores, effectively from 1 April 2019
- Annual filing of GSTR 4 return instead of quarterly. Also, tax is paid to be deposited on a quarterly basis.
- 6 percent GST rate applicable to the Composition scheme for service providers and turnover up to 50 lakh per annum
Note:
- The above amendments shall be applied after the official government notification.
- More: 32nd GST Council Meeting Updates for Composition Traders
Every taxation system has some prescribed rules or regulations which must be followed by individuals, taxpayer or business owners. Maintaining records properly, submission or filing returns timely, simplified generation, and periodic payment of taxes are some of the essential elements of the taxation system for corporate taxpayers. However, business enterprises and owners are facing difficulties to cooperate with such responsibilities of law. It happens just because of a lack of knowledge and the majority of people is not aware of the taxation system.
In 28th GST council meeting, the FM has decided to extend the threshold limit of composition scheme taxpayers from 1 crore to 1.5 crores. Also, included the 10% provision of normal taxpayer annual turnover within the composition scheme if in case the given 10 percent is provided as the service.
Key Features of GST Composition Scheme
Eligibility: – Everyone is not eligible to register under the GST composition scheme. Taxpayers or people whose annual turnover is up to INR 1.5 crore in a financial year. Turnover for special category States, except Jammu & Kashmir and Uttarakhand, the limit is now increased to Rs 75 Lacs. While the turnover threshold for Jammu & Kashmir and Uttarakhand will be Rs 1 crore must register under the GST composition scheme. The small traders should fill up GST CMP-01 form to accept the scheme.
Special Eligibility:- The GST council has included normal taxpayers within the composition scheme in case 10% of annual turnover is provided as a service.
Quarterly Filing Returns: – Instead of submitting returns 3 – 4 times in a month, taxable persons or registered taxpayers will be required to submit or filing tax returns only one time in every quarter under the GST composition scheme.
Intra- State Supplies: – Local suppliers, who supply goods or services within a state can take advantage of the GST composition scheme. Inter-state suppliers will come under the regular GST laws.
Bill of supply, not tax invoice: – Registered taxpayers under the GST composition scheme will be required to show the bill of supply instead of tax invoice to the tax authorities. A person paying taxes under the composition scheme can issue a bill of supply instead of an invoice. Exemptions up to 5 lakhs for services under the composition scheme are also available.
Not Eligible for Input Tax Credit: – According to section 16, goods and services on which composition tax has already been paid (under section 8) do not apply for Input Tax Credit.
Tax Rate: – Manufacturers – 1% ( .5% central and .5% state), Restaurants services – 5% ( 2.5% central and 2.5 state ), Composition levy eligible – 1% ( 0.5% central and 0.5% state )
GST Only on Taxable supplies: – Earlier it was a provision to pay composition GST even on the exempted goods but now after 1st January 2018, the GST will be only payable on the taxable goods.
Penalty: – If the taxable person is not eligible for the GST composition scheme, then the tax authorities can charge a penalty equal to the amount of tax on such person along with his tax liability. Be careful when availing of this scheme and paying taxes. The penalty will be imposed according to the provision of section 73 or 74 if an individual represents incorrect data under the composition scheme.
Voluntary Registrations: – For availing of the benefits of this scheme, taxpayers need to make voluntary registration. If in case, the taxpayer’s annual income turnover exceeds 75 lakh then he will be transferred to the regular scheme. Taxpayers who are already a part of VAT composition need to voluntarily register under this scheme.
Note: The eligibility and service supply exemption is under review after the 23rd GST Council meeting
Highly Recommended: GST Forms: Return Filing, Rule, Registration, Challan, Refund, Invoice
Registration Procedure Under the Composition Scheme
Registered or existing taxpayers not under the Composition Scheme may prefer to opt for it (subject to being qualified), only from the beginning of the next financial year. Tax returns to be filed on as or before 31 March of the previous year.
If in case dealers want to switch to the normal scheme, during the year, they may be allowed to do it. Although, they are not able to switch over to the Composition scheme again within the same Financial Year
Filing Returns Under the GST Composition Scheme
Individuals or registered taxpayers can pay tax under the provisions of Composition Scheme shall provide a return in an official form and official manner within the eighteen days after the end of the relevant quarter.
GST CMP 08 form has been officially declared by the government for depositing payment quarterly under the Composition Scheme.
FAQs on GST Composition Scheme
Q.1 Can a composition dealer purchase goods from an inter-state supplier?
Yes, of course, a person who has opted for composition scheme can procure goods from an inter-state supplier without any restrictions
Q.2 What are the specified composition rates?
Composition rate is uniform for dealers & manufacturers at 1% ( 0.5% Central tax plus 0.5% State tax). Composition rate for Restaurant Services is 5% (2.5% Central tax plus 2.5% SGST) of the turnover. Composition rate for service providers is 3%
Q.3 Is it mandatory for a Composition Dealer to maintain detailed records?
No, it is not mandatory for a registered Composition dealer to maintain detailed records as needed by a normal taxpayer.
Q.4 Is a Composition Dealers allowed to avail Input Tax Credit?
No, Composition dealer is not allowed to avail Input Tax Credit. A taxpayer who opts to pay tax under the composition scheme cannot take credit on his input supplies
Q.5 Is composition dealer responsible to pay both, the Reverse charge and a fixed percentage of normal GST which he is supposed to pay?
If the reverse charge is applicable on a specific supply then the composition dealer is liable to pay GST under reverse charge as a recipient of supply at standard GST rates
Q.6 Can the service provider go for the Composition Scheme?
Yes, Composition scheme for services has been introduced with an initial limit of Rs 50 Lakh, taxable at 6%, beginning from April 1, 2019
Q.7 Can a person avail ITC on the stock after being denied to pay tax under composition from an authorised officer?
Yes a person can still avail ITC by filing a statement in FORM GST ITC-01 (containing details of input stocks along with the inputs contained in semi-finished or finished goods present in stock) on the date on which the option is refused as per order in FORM GST CMP07, within a period of thirty days from the order
Q.8 When does an individual who opted for composition, pay tax?
An individual who opted for composition pays tax on a quarterly basis prior to the 18th* of the subsequent month of the quarter during which the supplies were made (changeable by the government notification)
Q.9 Can a Composition Dealer issue Tax Invoices?
No, a Composition Dealer can not issue a tax invoice because he has to pay the tax out of his own pocket and he is not permitted to recover the same from the customers. He is bind to issue Bill of Supply
Q.10 What are the different types of returns, a Composition Dealer has to file?
A Composition Dealer has to file one return i.e. GSTR-4 on an annual basis, CMP 08 on a quarterly basis.
Q.11 Can a Composition Dealer collect tax from customers?
No, a Composition Dealer has to pay taxes from his own sources and he is not eligible to recover the composition tax from the buyer
Q.12 Can an interstate supplier opt for Composition Scheme?
An interstate supplier can not opt for Composition Scheme as it is available only for dealers imbibed in intra-state supplies
Q.13 How is availed input credit treated when one switch on to Composition Scheme from the normal scheme?
In such a case when a person switches on to composition scheme from normal scheme, he/ she becomes accountable to pay an amount equal to the credit of input tax in terms of inputs present in stock on the day instantly after the date of the switchover. The remaining balance of input tax credit in the credit ledger after payment of such amount will be treated inconsiderable
Q.14 Can I choose for Composition Scheme in one year and flip flop in the later year?
Yes, You are allowed to switch between the Composition Scheme and the normal scheme on the basis of your turnover. The same switchover can be declared on the GST Portal. However, this flip flop comes along with alterations in the way you issue invoices and file your returns
Q.15 Is the alternative to pay tax under composition practicable at any time of the year?
No, the tax under composition cannot be paid at any time of the year. A registered taxpayer is supposed to provide a declaration on the GST Portal in FORM GST CMP-02 prior to the beginning of every financial year
kindly let me know applicability of composite scheme in my case. I have a retail business of electronics in a single state and also govt. contractor under the same name and pan and GST.
How can I avail composite scheme
No, you cannot opt for composition scheme since works contract is a service. If your annual turnover is up to Rs. 5 lakhs in respect of the works contract service and aggregate annual turnover is up to Rs. 1.5 cr then you can opt for composition scheme.
From which date the revised rate of 1% for manufacturers under composition scheme will be applicable? Whether from the start i.e. July or from the date of notification?
It will be applicable from July only.
Hi, Earlier I was registered as a regular taxpayer and filed Gstr 3b for July, later on, I applied for composition scheme on 29 Sep. 2017. Now how to file Gstr 4 for the quarter pertaining to July-Sep 2017. Please reply at the earliest.
As per the latest decisions are taken in GST council meet, if you opt for composition scheme, then that will be applicable from the next month. So you need to file GSTR-4 from October onwards.
Hi, In the above case, what should be filed for Qtr – July to September? Because GSTR-4 can be filed only form Qtr – October onwards.
Please clarify your query.
Hi, I tried to apply for Composition scheme and GST website doesn’t allow me. It says the following
“The last date to Opt-In for Composition Levy for 2017-18 was 30th Sep 2017. The window for opting in for composition levy for 2018-19 is planned in March 2018.”
How can I apply it now? I would like to bring my firm under Composition scheme from November 2017. What to do now?
The last date to opt for composition was 30th sept 2017 for the year 2016-17. The composition scheme cannot be opted for at the middle of the year. so you can opt for composition scheme from April 2018 only i.e. next financial year and not from nov 2017.
So what about the latest notifications says increased the limit from 75L to 1Cr? How people will register if it’s not open?
Hi sir. I was wrongly registered as regular and then changed to the composition in the same month July.. I paid the tax for the month of August (auditor said he paid in offline mode). Now it is automatically changed to regular. Am shocked. What to do now??
Contact to the department.
I opted composition, but when I file the GST-4 on GSTN portal not accept and said your option is after the 16th day of August 2017. What can I do? please guide me
Please contact department for assistance.
I have GST under Composition Scheme. I sell the Products to Service Providers(i.e Restaurant). Now my question is what will happen if the buyer has normal GST? They will have to pay the GST for their service as well as the GST for what they bought from me? if so, no GSTN holder will buy anything from Composition Scheme GSTN holder.
Buyer won’t get the input credit coz you are not issuing tax Invoice. Buyer is not liable to pay taxes on your purchases.
Hi,
I am a retailer having a physical shop in Karnataka, importing goods from China and getting some goods manufactured from suppliers in other states. I sell B2C primarily through the local shop as well as some via our own website to other people in India. Sometimes we take orders on the phone and dispatch the goods to customers in other states too after they pay via NEFT.
Can I opt for GST composite scheme?
Thank you.
No interstate seller cannot opt for composition scheme under GST.
Dear Sir, Under Composition Holder in GST Dashboard, Return for qtr July to Sep. till not Open So what can I do?
Utility for the same is still to be provided by the department.
I AM REGISTERED UNDER COMPOSITE SCHEME AND AT THE TIME OF REGISTRATION I HAVE FILLED CROSS THRESHOLD LIMIT BUT ACTUALLY, I HAVE NO TURNOVER LAST MONTH. WHAT I DO?
You can file nil returns if you have no turnover for the period.
Hi, I am small car accessories retailer & sell product on my own website having turnover 25 lac, Most of the orders come from other states & I purchase items from local manufacturers.Since govt implements GST of 28%, we are suffering the most, We had to pay Rs.55000/month GST. Just imagine how difficult for a small business like us will pay such high amount of tax, How can a small business survive in front of big players like Amazon & Flipkart & expand their business in future. Seriously Govt destroying small businesses like us, I request you please raise this issue & suggest whether we opt GST composition scheme or any other solution.
GST composition scheme cannot opt if you have interstate sales.
You can opt Composition Scheme. Its right for you as far as i know.
Sir, I have yesterday option for composition scheme now I have filled my form but I don’t see any change on dashboard but also I filled my GSTR-3B and GSTR-1 on date now I transfer my self for composition scheme but no change on dashboard.
Please Help
I am pharma franchise dealer..Can i apply for composition levy..If i want to sale my goods to composition levy retailer…Can i sale those who are composite dealer…Please reply..Regards
If your turnover do not exceed Rs 75 lacs and you do not sale outside the state then you can apply for composition scheme.
I am in Composite Scheme … can I import materials from other states without waybill … The Invoice shall not cross Rs.50000/- … Please help …
Dear Sir,
i was vat composition taxpayer in existing law, i could not optin composition scheme by mistake so i have created new registration under composition on the same PAN. now i have 2 provisional id regular/composition. i want to cont with composition taxpayer only, should i file regular return as a NIL till the cancellation option not available or i will wait with no action for cancellation option of the same. please tell what i do…
If you have obtained new registration as a composite taxpayer under the GST and have not opted for migration till now then you have to continue with the new registration only since date of opting for migration has already expired. Your old registration will be auto cancelled if not opted for migration.
Dear sir,
I have migrated successfully and its convert as a regular tax payer so I have applied for new registration (in composition) via migration process. now I have 2 provisional id regular/composition.
Q.1 should I submit regular return in NIL for 1 of my migrated regular provisional id till the cancellation option NA.
Q.2 I do not file any return of the same and wait for cancellation option.
Q.3 As I said two firm migrated with same PAN regular/composition, so I want to continue with composition provisional id only so what I do in
that case.
Regards
The window to opt for composition scheme for this financial year was 16th Aug 2017; going forward, one has to opt at the beginning of the year; I wonder if you have been allotted a new separate provisional GSTN in REG 25; you may have only received an ARN. Please confirm status to enable me to answer.
Dear Sir,
One of my migration certificate generate in REG 25 as a regular tax payer and the second one of the same generate in REG 06 as a composition taxpayer (with the same method of migration).
1. my query for the REG 25, that I was exiting composition tax payer could not opt in the composition scheme so I have created another GSTIN number as a composition dealer i.e. 2ZO
2. Should I submit REG 25 Regular Return or i have to wait for cancellation/surrender option.
3. What i do for REG 25 REGULAR or REG 06 COMPOSITION for the same firm/place/pan/business because i am existing composition taxpayer.
please reply
Sir, we registered in vat as regular and now we opt composition scheme in GST , we have utilise all cenvet but some stock approx. Rs. 70000/- are laying with me (@ VAT 5% ). How we return the utilize input on laying stock.
Adarash Stores Bhatni.
Deoria
Uttar Pradesh
Input has to be reversed on the goods lying in the stock.
I think it is not available in the site. Can u please tell me how can i apply?
you can fill the form once it is made available by the department.
i have missed the date (16 Aug 2017) to opt for Composition levy tax.. what can i do to opt for composition scheme ? is there a way to opt? i had thought that during migration from VAT to GST, all the characteristics will be taken in GST scheme.. but i never knew about the opting procedure.. please help me out..
You can apply for a new registration.
NOW, Further re-open opt for composition scheme in GST portal on same system. So, change the same as an early and possible.
My consultant forget to put me into composition and the last for applying composition is over on 16th august so kindly let me know what to do And like me there are so many people those who some problems and didn’t apply the comp. On given so it is to request to kindly extend the date up to 30th August.
i want to register my firm in composition scheme, but due date for filling is over. now what can i do to register my firm in composition scheme.
Sir, i have wrongly migrated GST under composition scheme by filing comp-1. How can i cancel the composition scheme and get regular GST scheme?
you can apply for cancellation of the registration. Online cancellation facility has been provided.
By mistake my consultant didn’t opt for composition scheme at the time of registration. Is it possible for me to opt for composition scheme now? If yes how?
Every registered person under GST and opts to pay taxes under Composition Scheme, must follow
the following:
a) Intimation in FORM GST CMP- 02 for exercise option
b) Statement in FORM GST ITC- 3 for details of ITC relating to inputs lying in stock, inputs contained in semi-finished or finished goods within 60 days of commencement of the relevant financial year
sir, i want to take a new registration and do application around 12.08.2017 under composition scheme then what is the last date of registration. can i do registration under composition scheme.
Registration under GST has reopened on 25th June for a period of three months.For fresh registration under the scheme, intimation in FORM GST REG- 01 must be filed.
sir can i do a new GST application after 16-8-17.
sir i m doing a new registration of GST under composition scheme of propriotery concern then is it mandatory to take DSC for GST registration or can i do registration from aadhar card.
sir, what is provision of penalty levied by mining engineer department and paid by company for overloaded vehicle this is govt.department and has charged a penalty.is there any RCM liabity of GST by company.
sir i m doing a new registration of GST under composition scheme of propriotery concern then is it mandatory to take DSC for GST registration or can i do registration from aadhar card.
at time opting composition scheme showing Financial year 2018-19 it will not effect 2017-18 please clarify
If my turnover is more than 75 lakh in FY 2016-17. Can i opt for composition scheme in FY 2017-18?
No you cannot opt for composition scheme due to turnover.
Sir have made 4 invoices and collected tax @18 % under regular system in month of july. Can I opt for composite scheme from august onwards.
what is the procedure to switch over from composition scheme tp regular scheme under GST.
Hello,
We own a Footwear showroom in Lucknow, and get supplies from outside UP(Registered Dealer) but we sell only in Lucknow, our annual turnover doesn’t come close to 75 lakhs.
So can we opt for GST composite scheme?
If yes, then does it mean we will have to file returns quarterly?
And what would be tax rate applicable to us?
Please reply.
Thanks
Yes, you can opt for composition scheme. You have to file quarterly return. GST rate is 0.5%.
I am a rice dealer, it is non taxable can I opt for composition scheme how should I pay tax
In case of non taxable item, bill of supply is required to be issued. No tax is required to be paid. But if registration is opted for then return filing provisions are applicable.
I ve having a fitness centre(gym)..pl let me know whether I can comes under composite scheme
yes you can opt for composition scheme
Hi
I sell products b2c. But I have stock from before 30 June, which is supplied from other state. Can I ask for composite scheme.
If no what’s the solution for it.
yes you can opt for composition scheme
Sir I am a retailer and I have a previous stock of 10 lakhs which is a local purchase can I opt for composition scheme.
yes you can opt for composition scheme
Is it so that first I have to pay tax on my previous stock then only i can go for composition scheme.
Mai Ek Contractor hun And Maine Tile Ki Manfu. FActory Bhi Lagai Hai
Main Galti Say composition scheme ley le hai . Muhje Pta laga Hai K Contractor composition Scheme Mai Nahi aate. Ish Liye Muhje Compositions Scheme Cancell Karni hai , Kaise Ho gi
i am a registered dealer of gst and i want to registered to composition scheme how do it. help me.
Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:
dear sir,
i am going to open a proprietorship business, will sale my goods to other sates too, as i assumed that my business should have a turn over less than 75 lacs this year then should i go for a composition scheme or normal GST registration ? please suggest
If you sale goods to another state than you are not eligible for composition scheme and registration is compulsory irrespective of limit of Rs. 20 lacs.
Sir how to make bill of supply under composition scheme. Is the amount of tax included in actual amount or it is show seperatly?
Bill of supply is issued in case of non taxable supplies or supply of exempted goods/ services. Bill of supply shall include value of supply of goods or services or both taking into account discount or abatement. No tax amount has to be shown separately.
My sale turnover is 3 lacs, I am already registered under GST. Can I opt for Composite scheme
yes you can opt for composition scheme by filing up the relevant form
Could you please let me know which form to fill to switch from GST to Composite scheme?
Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:
what is the procedure to get converted to composition scheme from normal scheme?
Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:
I am a small trader (proprietorship) and also have some residential rental income (which is exempt from GST). The GSTIN for my trading business has the same PAN number which I use to file my personal income tax return (which includes income from trading business as well as rental income). Am I eligible to register my trading business under GST Composition Scheme?
Yes, you can register under composition scheme.
If the annual turnover is 15 – 16 lakh and if opt for composition scheme then how much tax must I pay on the turnover ???
If annual turnover is less than 20 lakhs the there is no need for registration under GST. If you want to opt for composition scheme, the rate is 2.5% for manufacturers and 1% for others.
Pls clarify 2% or 2.5% for manufacturer
Rate is 2% for manufacture,.
Dear Sir,
Our company sold the product on the basis of C’ Form and it is to be retrieved from the customers from years. How can we approach them or what kind of information we have to give them to retrieve the pending C’forms from the customers.
It’s wrongly mentioned for eligibility that Taxpayers exceeding Rs ,50 lakhs per year must register for composite scheme
It should be “must not register for composite scheme”
We updated it, thanks for your concern.
Can composition dealers take a govt contract? If yes then In which limit
Please contact to GST practitioner