What is composition scheme?

24 November 2020

plz explain in brief?

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3 Replies

deepa pg (15 Points)
Replied 24 November 2020

This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore.o opt for composition scheme a taxpayer has to file GST CMP-02

-beginning of every Financial Year by a dealer wanting to opt for Composition Scheme.

Compensate dealer has to issue a Bill of Supply (not Tax Bill)

The following conditions must be satisfied in order to opt for composition scheme:

No Input Tax Credit can be claimed by a dealer opting for composition scheme
The dealer cannot supply goods not taxable under GST such as alcohol.
The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him.
As per the CGST (Amendment) Act, 2018, a manufacturer or trader can now also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, 2019.

deepa pg (15 Points)
Replied 24 November 2020

This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore.o opt for composition scheme a taxpayer has to file GST CMP-02

-beginning of every Financial Year by a dealer wanting to opt for Composition Scheme.

Compensate dealer has to issue a Bill of Supply (not Tax Bill)

The following conditions must be satisfied in order to opt for composition scheme:

No Input Tax Credit can be claimed by a dealer opting for composition scheme
The dealer cannot supply goods not taxable under GST such as alcohol.
The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him.
As per the CGST (Amendment) Act, 2018, a manufacturer or trader can now also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, 2019.