Composition Scheme under GST | Merits & Demerits
For taxpayer and businesses, GST composition scheme is a simple and easy scheme.Due to this scheme, small businesses in the GST, which turnover Rs 20 lakh (Rs 10 lakh in Assam and north-eastern states) are not required to pay GST and to get the registration. Similarly, there are composition schemes for simplifying GST for small and medium enterprises whose turnover is up to Rs. 75 lakhs, under which the businessmen can pay tax on a fixed rate of the total fixed cell, and only 5 Return filling will be required.
Composition scheme introduced. Why ?
- to increase the number of GST returns.
- tax payment on a monthly basis
because small business faces a very tedious problem due to new rules under GST
so the government decided to introduce the concept of composition scheme.
This is another option for small and new businesses to opt composition scheme and have low compliance.
Who can decide on for Composition Scheme?
Businesses whose annual turnover is below one crore can decide on for composition scheme.
Conditions for availing composition scheme.What ?
1. Under composition, scheme taxpayer can make only intra-state supply(sell in the same state) not the inter-state supply of goods.
2. The dealer cannot supply GST liberated goods
3.The dealer can't be claimed ITC for composition scheme.
4. Is a business have a different part of business under the same PAN no. they must register all business under the scheme collectively otherwise have to get out of the scheme.
The advantage of composition scheme. What?
- Businesses will have to pay taxes at a lower rate.
- Businesses will have to file the quarter return only once in three months instead of 3 Returns.
- Detailed Invoice will not be required for the businesses of composition schemes, only the bill of supply will be enough.
- Small businesses will not have to give information about HSN code in Return.
Other compliances related to GST will also be easy.
The disadvantage of composition scheme. What?
- No Input Tax Credit available to structure dealers
- The taxpayer will not be allowed to provide products through an e-commerce portal
- This scheme is harmful to businesses whose only inputs are more in credit or if they want to pass on further credit passage.
Should you be troubled about any GST composition scheme related issue as a taxpayer, Certainly you can ask advice from our GST professionals at SAG Infotech. Here you get finish help on GST related problem and GST return filling. You can also use our taxation based GST software for any type of query from beginning to end.
