What is GST composition scheme and who can opt for it ?
A composite Dealers are those dealers who opt for composition scheme under GST. These are those dealers who registered themselves as composition Dealers. A taxpayer whose turnover is below Rs 1.50 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 1 crores..
Eligibility For GST Composition Scheme
Getting registered under composition scheme is optional and voluntary. Any business which has a turnover of less than Rs. 1.5 crore or 1 crore for the specified states can opt for this scheme but on any given day, if turnover crosses the above-mentioned limit, then he becomes ineligible and has to take registration under the regular scheme. There are certain conditions that need to be fulfilled before opting for composition levy.
Who are not Eligibility For GST Composition Scheme
- Supplier of service other than restaurant owners(Serving foods and non-alcoholic drinks)
- Supplier of non-taxable goods
- If the person in engage in the inter-state supply of goods
- Supplier supplying goods through E-commerce operator, who is eligible to collect TCS
- Supplier of tobacco, pan masala, and ice cream
- There are certain conditions that need to be fulfilled before opting for composition levy.
Condition for Composition scheme
- composition Dealer cannot claim the Input tax credit.which is available for Regular Dealer
- The Composition dealer cannot supply GST exempted goods
- The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
Benefits of Composition Dealers
- Lesser compliance as returns, maintaining books of record, issuance of invoices are not as much complicated as Regular dealer
- Limited tax liability
- High liquidity as taxes are at a lower rate
What return Composition dealer need to File ?
- A taxpayer opting for the Composition Scheme is required to file GSTR-4.
- The GSTR-9A is the annual return to be filed once in a year by taxpayers who have opted for the Composition Scheme under GST for a particular financial year. It includes all the information furnished in the quarterly returns filed by the composition taxpayers during that financial year.
Due date of Filing Returns Under Composition Dealer
- the due date for filing GSTR 4 is 18th of the month after the end of the quarter.
Important Terms Under GSTR 4
GSTIN – Goods and Services Taxpayer Identification Number
UIN – Unique Identification Number
UQC – Unit Quantity Code
HSN – Harmonised System of Nomenclature
SAC – Services Accounting Code
POS – Place of Supply of Goods and Services
B2B – From one registered person to another registered person
B2C – From registered person to unregistered person
HSN: Harmonised System of Nome
Penalty and late payment Under GSTR 4
- A penalty of Rs. 200 per day is levied if the GSTR-4 is not filed.
- The maximum penalty that can be charged is Rs. 5,000.
- Also, if the GSTR-4 is not filed for a given quarter, then the taxpayer cannot file the next quarter’s return either.
Disadvantages of Composition Dealers
- Inter-State Sale Not Permitted
- Non-availability of Input Tax Credit
- Collection of Tax Is Not Allowed
- Supply of Services Not Covered
- Non-eligibility To Supply Exempt Goods
- Generally Less Preferred By The Registered Person
- Non-eligibility To Supply Goods Through E-commerce Portal
Annual return for composition dealer
The GSTR-9A is the annual return to be filed once in a year by taxpayers who have opted for the Composition Scheme under GST for a particular financial year. It includes all the information furnished in the quarterly returns filed by the composition taxpayers during that financial year.