What is Composition Scheme under GST?
- Blog|GST & Customs|
- 974 Views
- 2 Min Read
- By Taxmann
- Last Updated on 1 March, 2022
Need to Introduce GST Composition Scheme:
Composition scheme under the law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law. Composition levy would be generally opted by persons who are supplying goods & services or both to the end consumer.
GST Made Easy provides an Updated, Comprehensive & Simplified Analysis of each provision of the GST Law. The objective behind this book is that the understanding of GST should be as easy as ABC. This book provides answers to all your practical queries on GST.
Conditions for Opting for Composition Scheme under GST:
- The person opting for composition levy should be a registered person.
- Aggregate turnover of registered person in the preceding Financial Year should not exceed Rs.50 Lakh.
- Following class of registered persons would not be entitled to opt for Composition Levy in lieu of Tax payable by them:
- Person engaged in supply of services other than supplies referred.Therefore, person engaged in supply of services would not be eligible to opt for composition levy except for person engaged in supply of food for human consumption.
- Person making any supply of goods which are not leviable to tax under this Act. At present following goods are not leviable to tax under this Act:
- Petroleum Crude
- High-Speed Diesel
- Motor Spirit
- Natural Gas
- Aviation Turbine Fuel
- Alcohol for Human Consumption
- Person making any inter-State outward supplies of goods.
- Person making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52.
- Person who is a manufacturer of such goods as may be notified by the Government on the recommendation of the Council.
Rate of Composition Levy in GST:
- 1% of the turnover in State or turnover in Union Territory in case of a manufacturer
- 2.5% of the turnover in State or turnover in Union Territory in case of persons engaged in making supplies. This entry covers the registered persons making supply of food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption. For e.g. Restaurants or Hotels.
- 0.5% of the turnover in State or turnover in Union Territory in case of other suppliers.
However, the above rates are only in respect of CGST Act, Equivalent Rates would be prescribed under SGST/UTGST Act. Thus effective rates would be 2% for manufacturers, 5% for persons making supply of food etc. and 1% in case if other suppliers.
- Goods and Services Tax Explained with Benefits
- Types of GST in India
- Time of Supply under GST
- Reverse Charge Mechanism under GST
- GST Returns
- Place of Supply under GST
- HSN Code List with GST Rate
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied