GST Composition Scheme Registration

Due to changes in indirect taxation, every taxpayer is obligated to comply with certain requirements, including the monthly payment of taxes, timely filing of GST returns, and maintaining records as prescribed by law. In order to make compliance easier for businesspersons, a Composition Scheme has been introduced under Section 8, which allows taxpayers to pay taxes to the government at a certain percentage of their turnover without being permitted to take input tax credit. This scheme aims to achieve "one nation, one tax" and reduces the compliance burden for businesses compared to earlier laws. To opt for this scheme, a dealer must file an electronic intimation in FORM GST CMP-01, signed and submitted through the Common Portal or a Facilitation Center.

Eligibility for GST Composition Scheme Registration

The taxable persons having Aggregate annual turnover of Rs. 50 lakhs are proposed to be made eligible for Composition.

• Thresholds limit of aggregate Turnover Rs.50 Lac

• Scheme to be opted for all Units under same PAN

• Tax would be paid not less than 1%

• Tax would not be charged and collected from Customer

• Not entitled to take input tax credit

Key Highlights of GST composition levy

Tax Rate

Rate not more than 1% for manufacturer, 2.5% for restaurant sector and 0.5% for other suppliers of turnover.

Applies to Sales with in State

Local suppliers, i.e., those who supply within a state can only take advantage of this scheme. Inter-state suppliers will come under regular GST laws.

Quarterly Return

GSTR-4 has been prescribed by the government as a tax return form to be filed by a dealer under Composition Scheme.

Penalty

Where taxable person is found not eligible for scheme in that case officer may ask for penalty then the tax authorities can impose a penalty equal to differential tax along with penalty.

Turnover Limit

If the turnover of assessee opting composition scheme exceeds Rs.50 Lakhs during the year, he will be shifted to normal Scheme automatically.

Composition Scheme GST Rates

The category of registered persons, eligible for composition levy under section 10 and these rules, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table.

Particulars Rate 

• Manufacturers, other than manufacturers of such goods as may be notified by the Government = 1%

• Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II = 2.50%

• Any other supplier eligible for composition levy under section 10 and these rules = 0.5%

Return Filing Under Composition Scheme

The Composition scheme was introduced under GST Law to simplify compliance requirements for registered taxable persons. Those under this scheme are only required to file a quarterly GST return within 18 days after the end of the relevant quarter. GSTR-4 is the tax return form designated by the government for dealers under the Composition Scheme. The registered taxable person must provide details of the total turnover of supplies during the period and tax paid in this return. Additionally, the dealer needs to provide information on invoices-level purchases.