GST Composition Scheme

The government has provided Composition Scheme under GST for those Small and Medium Enterprises (SMEs) having annual turnover below than Rs. 75 lakhs (50 lakhs for North-Eastern States).

Under this scheme, taxpayers pay tax at flat rate based on their business turnover.

Any business that deals in goods is eligible for this scheme. Service providers are not eligible for this scheme except restaurant sector

Key Features:

1. Require less maintaince of books of accounts.
2. Only quarterly return.
3. Less number of compliance.
4. Not eligible for input tax credit.
5. Apply only to the Intra-State suppliers
6. Not tax invoice only Bill of Supply can be issued.

Tax Rate of composition scheme:

Sectors	Tax Rate (%)
Manufacturer	2% (CGST-1% and SGST-1%)
Restaurant	5% (CGST-2.50% and SGST-2.50%)
Traders	1% (CGST-0.50% and SGST-0.50%)

Features of composition scheme:

1. No input tax credit – a taxable person covered under the composition scheme of GST shall not be entitled to any credit of input tax.2. Collection of GST is not permitted – a taxable person covered under the composition scheme GST cannot collect tax from the recipient i.e. customer or service receiver on supplies made by him.3. Suppliers cannot issue taxable invoice – a taxable person covered under the composition scheme cannot issue taxable invoice because he/she is not eligible to collect GST on such supply.4. Such declaration on every invoice – a taxable person covered under the composition shall have write “composition taxable person, not eligible to collect tax on supplies”.

Return of composition scheme

Name of Quarter	Last date of filing the return
1st Quarter	18 July
2nd Quarter	18 October
3rd Quarter	18 January
4th Quarter	18 April