GST act had given benefits to different kinds of traders and suppliers of services for easy compliance and enabling active participation of all traders in a business circle by allowing gst composition scheme registration. One of the benefits provided by the GST Act is gst composition scheme for small traders of goods and suppliers of services which helps them to pay reduced rates of taxes and minimum compliance, initially composition scheme was available only to suppliers of goods and further, it was extended to the supplier of services.
Eligibility for GST composition scheme
All suppliers of services and suppliers of goods are eligible, except the following
1. Manufacturer of ice cream, pan masala, or tobacco
2. Person making interstate supplies, i.e. person supplying sales between different states, is not eligible
3. Casual taxable person or a non-resident taxable person
4. E-commerce sellers of goods and suppliers of services.
- GSTR-4, Only 1 Return per quarter.
- Reduced rates of tax are as follows
Manufacturer and trader – 1% (.5+.5)
Restaurants not serving alcohol – 5% (2.5+2.5)
Other service providers – 6% (3 +3)
- Minimum compliance
1. The dealer should issue a Bill of supply that is similar to the invoice copy, but it should not mention tax amount, etc.
2. Cannot make the interstate supply.
3. Every Bill of supply and prominent places of business should mention “COMPOSITION TAXABLE PERSON”
4. Should re-assess every financial year and opt for the scheme if interested.
5. Input tax credit cannot be claimed
6. Cannot sell exempted goods or services.
7. Should include all turnover under the same PAN. And should be opted for all registered under the same PAN.