GST composition scheme refers to a simple-to-understand initiative under GST. Meant for the small taxpayers, this scheme allows one to brush off the tiring formalities of GST and pay the returns at a fixed turnover rate. Any taxpayer whose annual turnover is less than INR 1.5 Crore can earn the benefits of this scheme.
On 28th May 2021, the GST Council Meeting was organized and the following reliefs were added to this composition initiative:
But these updates are old. What is the GST composition scheme? Let us understand the nitty-gritty about this initiative through this article.
Taxpayers with annual turnover less than INR 1.5 Crore can opt for a scheme that lets them get rid of the tiring GST formalities and instead, let them file one return. That scheme is called the Composition scheme.
As per this scheme, a taxpayer can inform the tax authorities about their intention behind registration under this scheme.
A Composition dealer has a permit to supply services up to 10 percent of the turnover or INR 5 Lakh. In simple words, the seller can directly pay the GST on the sale price of a service to the government without getting the invoice involved. It prevents any undue complications and helps with the smooth running of the business.
However, given the nature of this scheme, not everyone is at liberty to benefit from it.
As per the rules that define the intricacies of this scheme, the following entities are barred from opting it:
Ice Cream, Tobacco, and Pan Masala Manufacturers
Furthermore, there are quite a few conditions that have to be met before implementing this scheme.
The following are the conditions that one has to keep in mind when choosing this scheme:
To opt for the composition scheme, the applicant must file GST CMP-02 with the government of India. The way to file it is a simple one. One only needs to go to the GST registration portal and fill out the application form.
However, just registering in the scheme is not enough. One must also know how to raise a bill under this scheme.
For a composition dealer, raising a tax invoice is not an option. As they will be paying taxes from their own pockets, the only bill they are allowed to raise is the “Bill of supply”.
The GST Composition Scheme is a way to cut through much of the complexities of taxation and streamline it. If you want to get the benefit of this scheme, or want to know more about it, consult with Registrationwala.