Composition Scheme Rules under GST provide for all the procedural compliance w.r.t. intimation for Composition Scheme, effective date for levy, conditions and restrictions on levy, validity of levy and rate of tax.
- Pay taxes only at a certain percentage of turnover
- File periodic returns only (usually on a quarterly basis)
- Have an option of not having to maintain detailed records or follow tax invoicing rules
- Are not allowed to take Input Tax Credit (ITC)
- Are not allowed to collect tax on sales
1. For persons already registered under pre-GST regime
2. For persons who applied for fresh register under GST to opt scheme
3. Registered under GST and person switches to Composition Scheme
b. Conditions for a Composite Tax Payer
- Cannot be engaged in supply of services, other than supply of food or drinks for human consumption
- Cannot be engaged in manufacture of specific notified goods
- Cannot supply goods not taxable under GST
- Cannot supply goods through an e-commerce operator
- A composite tax payer should not engage in interstate outward supply of goods and / or services .
- If the composite tax payer is in the trade of supplying goods and services, then composition levy will be applicable for both supply of goods and supply of services.
- – The composite tax payer does not have to collect tax on all his outward supply of goods and / or services.
- Composition levy will be applicable for all business verticals operating within state or interstate under the same pan.
- An individual with different business verticals, like:
- Mobiles & Accessories
- The composite tax payer is not eligible to claim input tax credit on all his inward supply of goods and / or services.
- If a dealer chooses to be a composite tax payer, he cannot claim input tax credit even if he makes taxable purchases from a regular taxable dealer. Ideally, the taxable amount would be added to the composite tax payer’s cost.