What is Composition Scheme under GST ?

Composition Scheme under GST ?

Composition scheme is available to the dealers whose turnover is less than the notified amount Rs 1.5 crore (50 Lakhs for north eastern states). Persons who opted this scheme have to file quarterly returns. GST should not be collected from customers. They need to pay GST on sales from their own money at the notified rate.

Traders, Manufactures and restaurant sectors can only avail composition scheme.

Note: If any business supplies good or services or both to other states, then they cannot avail composition scheme benefits under GST Act.

Advantages of GST Registration under Composition Scheme

• The taxable person is required to file only one return on a quarterly basis as compared to regular scheme who has to file 2 or 3 returns on a monthly basis.
• Rate of tax is very low as compared to regular tax payers.
• Low compliance as compared to regular tax payers.

Disadvantages of Registration under the GST Composition Scheme:

• Applicable only for intra-state supply of goods.
• The tax payers registered under composition scheme cannot avail input tax credit on purchase of goods or services or both.
• The tax payers registered under composition scheme are not eligible to collect tax from customers.