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Need advise on changing composition to regular gst scheme

gekco (B.Com) (170 Points)

28 February 2018

Hello Sir, We are registered under composition GST, our annual turnover is 45-50 lakhs. Our accountant is suggesting us to switch from composition to GST so we can save 45-50K that are paying quarterly as 1% of turnover by taking benefit of input credit from purchases.

Please give your suggestions if switch is recommended. I used to think that composition was more cost saving but now it seems more expensive when compared to regular scheme.

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8 Replies

CA SUDHINDRA D S (Practising CA) (761 Points)
Replied 28 February 2018

Composition is always a additional tax burden. Following are the points to be kept in mind while deciding :-

1. As a regular dealer you will be able to get the credit and adjust the same against output liability. However, compliance has to be taken care in such things. Monthly 3 returns (as per the act) has to be filed against 1 for every 3 months in case of composition. The filing of those returns comes with some professional fees.
2. Maintenance of books in case of composition is much simpler.
3. You can save 1% of the composition tax. your margin will increase by 1%.

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sunita (partner) (124 Points)
Replied 28 February 2018

compare both the scheme in terms of cost benefit analysis and then take decision.

gekco (B.Com) (170 Points)
Replied 28 February 2018

Hello SUDHINDRA , We have been told that for our turnover we will have to file quarterly returns only even in regular scheme, Please let me know if it is not correct, and we will have to file 3 returns in regular even for less turnover

Divakar (Student CA Final ) (11857 Points)
Replied 28 February 2018

For turnover less than 1.5 crore... Quarterly return is there... Now only GSTR3B upto march..

Divakar (Student CA Final ) (11857 Points)
Replied 28 February 2018

But when ur itc lapse i mean full utilise then u hv to pay normal tax rate... And not all day u have sufficient ITC... On profit portion u hv to pay normal gst rate

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CA SUDHINDRA D S (Practising CA) (761 Points)
Replied 28 February 2018

upto the month of March regular person should file GSTR 3B every month and gstr 1 quarterly for your turnover. GSTR 2 and 3 are yet to be notified for the period. However from April it may change to three returns.

Further, there are speculations that number of returns and periodicity of filing may reduce.

I feel to wait till next council meeting and take a call

gekco (B.Com) (170 Points)
Replied 01 March 2018

Hello Sir, Can we make switch from composition to regular any time or we will have to do in April 2018 at the beginning of financial year.
@ Divakar , Does ITC lapse after some time or it keeps accumulating if not used ? As a normal business, we always have purchase higher than sale and stock keeps increasing a bit every year.

Divakar (Student CA Final ) (11857 Points)
Replied 01 March 2018

You can switch off to normal scheme now windows is open.... And itc never lapsed if u hv sufficient itc then it is carried forward after adjusting against ur output liability.... Yes u should go for normal scheme if u hv always sufficient stock