Snapshot of GST Composition Scheme

GST aims for covering a larger number of individuals and by keeping the threshold exemption limit of 10 Lakhs a lot of people will come under the purview of GST.  The minor taxpayers might not have appropriate infrastructure, awareness, knowledge, etc., to comply with all such provisions of law along with IT/ERP availability, accounting, and massive paperwork. Hence, most of the tax law offers an alternative simplified scheme, known as GST Composition Scheme, that is ready and easy for the small tax payers.

Eligibility for the GST composition scheme:

The Composition Scheme could be availed by

• A registered taxable person and
• Does not effects any inter-State supply and
• The total turnover within the financial year do not exceed Rs 50 lakh

Any Registered dealer with Taxable Turnover of less than Rs 50 lacs in a financial year would be entitled for composition scheme in GST. However traders not registered under GST or traders supplying goods in interstate trade will not be entitled to composition of scheme

Who are not eligible?

Composition Scheme cannot be availed by:

• A taxable person who effects inter-State supplies of goods or services. or
• A taxable person who has not yet registered himself under GST

Key features of the Composition scheme

1. The Scheme is based on the commendations of the GST Council
2. The Scheme is subject to the prescribed conditions and restrictions which is yet to be prescribed
3. The appropriate officer of CGST/SGST would allow the taxpayer in paying or assessing under the scheme as against paying at the maximum rate. In the prevailing VAT or service tax laws, such condition of officer permission is not available.
4. The permission would be permissible only to a registered person and will not be available for an unregistered person.
5. Exact tax rate has not been prescribed in the section and a minimum rate of 1 percent is mentioned.
6. This scheme is a PAN based .An assessee all the units with the same PAN would be assessed under the scheme. If one of the units of the assessee wants to assess as per the regular scheme and not under the composition scheme, all the other units of the assessee would become ineligible from the purview of the composition scheme.
7. Individuals assessing under the composition scheme would not collect tax from the receiver of the supplies. Accordingly, the supplies recipient would not receive any credit of tax that is paid under the scheme.
8. Likewise, suppliers assessing under the composition scheme are not eligible for availing any input tax credit on their procurements of goods and services.
9. If the scheme is availed wrongly, then the appropriate officer could demand a differential tax together with an equivalent penalty.

Also Read – Key aspects of Input Tax Credit under Model GST Act