GST Composition Scheme

GST Composition Scheme

Category : GST

GST Composition scheme is made for the benefit of small dealer, small manufacturer and small service provider by reducing their burden of compliance.

Like: Less number of returns, less maintenance of books and records as compared to general dealer.

Who can opt for GST Composition scheme?

  • Dealers and manufacturers, who are supplying goods and whose aggregate turnover does not exceed Rs. 75 Lakh in the preceding financial year. In the previous law there is no benefit to manufacturer but the same is given in GST law.
  • No benefit is given to the service providers but there is an exception is given to the restaurant service providers as mentioned in clause (b) of paragraph 6 of schedule II. If a restaurant service provider is providing services and aggregate turnover does not exceed 75 lakh in the preceding financial year then he is entitled to opt for composition scheme.

    Aggregate Turnover means the aggregate value of

  • All taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),

  • Exempt supplies,

  • Exports of goods or services or both and

  • Inter-State supplies

    of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess. [Section 2 (6)]

    Particulars Treatment
    Outward Taxable Supplies Included
    Outward supplies in case tax is payable under reverse charge basis by the recipient Not Included
    Exempt Supplies (Nil rated, Wholly exempt or Non taxable) Included
    Export of Goods or Service Included
    Interstate Supplies Included
    Central Tax, State Tax, Union Territory Tax, Integrated tax, Cess Not Included
    Inward Supplies including inwards supplies on which tax is payable under reverse charge basis by the recipient. Not Included

Persons not eligible for GST Composition Scheme

– Supplier making inter-state outward supplies of goods.

– Supplier engaged in making supply of goods through Electronic Commerce Operator (it appears to be against the vision of Digital India)

– Manufacturer of such goods as may be notified by the Government

– Casual taxable person or a non-resident taxable person

– Supplier of services other than discuss in above table i.e. food/restaurants service

– Supply of goods which are not leviable to tax under this act

If the supplier has stock as on appointed day which is purchased form unregistered dealer then the supplier is required to pay tax under reverse charge according to subsection 4 of section 9 otherwise he is not entitle to opt composition scheme.

Categories of registered person Central Rate State / UTGST Rate Total
Manufacturer other than goods notified 1.00% 1.00% 2.00%
Other Supplier like agent, Traders 0.50% 0.50% 1.00%
Composite supply of food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption) Example: Restaurants, Eating Joints, Mess, Canteens, Outdoor Caterer, etc 2.50% 2.50% 5.00%
Service Provider NA NA NA

FAQs on Composition Scheme