With the threshold for registration under GST being as low as INR 20 lakh, a large number of small and medium size businesses would now come under the new tax regime. Considering these Organisations may not have the infrastructure and resources to comply with the regular provisions, a Composition Scheme under GST has been introduced.
Let us take a look at the applicability, eligibility criteria, conditions, and other provisions of this scheme.
Who can opt for the Composition Scheme?
- Manufacturer
- Food and Restaurant Services
- Traders
The decision to opt for the Composition Scheme should be made at the beginning of the Financial Year for a person already registered under the GST Law or at the time of applying for registration or within 30 days from the 1st of July, 2017 in case of person migrating from the existing provision.
What is the eligibility criteria to opt for the Composition Scheme?
A person in any of the above categories, whose aggregate turnover did not exceed INR 75 lakhs* in the previous financial year is eligible to opt for this scheme.
Aggregate Turnover = Value of Outward Supplies + Zero Rated Outward Supplies + Exempt Outward Supplies
Aggregate Turnover covers all the supplies effected by a person having the same PAN.
* The threshold limit for opting Composition Scheme in Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh is INR 50 lakhs.
What are the rates of taxes under the Composition Scheme?
| Category of Persons | Rates of Tax |
| Manufacturer | 2% |
| Food and Restaurant Services | 5% |
| Traders | 1% |
Tax is payable on the Turnover of the Person in a State or Union Territory.
Turnover in a State or Union Territory = (Value of Outward Supplies + Zero Rated Outward Supplies + Exempt Outward Supplies)
Illustration
Is the supply of bakery products eligible for Composition Scheme under the Food and Restaurant Services category?
The supply of food and restaurant services category is the only service included under the composition scheme. For a business to be categorised as food and restaurant services, there needs to be an element of service involved. In the case of supply of bakery products, there is only a supply of goods i.e. food items but there is no element of supply of service. Hence supply of bakery products is eligible for composition scheme under the Traders category and not Food and Restaurant Services category.
What are the conditions to be complied with, to opt for the Composition Scheme?
The person should not be:
- engaged in the supply of services other than the food and restaurant services
- engaged in the supply of alcohol liquor for human consumption
- engaged in the manufacture of ice-cream, pan masala or other tobacco products and tobacco substitutes
- engaged in inter-state outward supply of goods
- engaged in making a supply of goods through an ecommerce operator unless the portal is owned by the said person
- a casual person or a non-resident person
- in possession of stock purchased through interstate trade or transfers or imports on the appointed day
- in possession of stock purchased from an unregistered dealer and if he is in possession of such stock, tax under reverse charge mechanism has been paid
What are the other provisions that one needs to keep in mind while opting for the Composition Scheme?
- Composition scheme, once opted will apply to all the business verticals of the said person i.e. the option of the scheme will be awarded to all the businesses owned by a person under a single PAN.
Illustration
| Combination of businesses owned by a person under a single PAN | Applicability of Composition Scheme |
| Restaurant, mobile dealership and textile manufacturing unit | Yes |
| Restaurant, supply of mobile through an ecommerce operator | No |
2. The person shall not collect tax from his customers on the outward supply made by him
3. The person shall not utilise the input tax credit on his inward supplies to pay his output tax liability.
4. The person shall continue to pay taxes at the regular rates for inward supplies under the reverse charge mechanism
How is Input Credit treated at the time of opting for Composition Scheme?
On opting for the Composition Scheme, if the said person has any input credit available, then he shall reverse the amount equal to the input credit on the stock held by him on the immediately preceding day of exercising the option. The stock can be inputs, semi-finished goods, finished goods or capital goods. The remaining value of input credit, if any shall lapse.
In case of a person migrating from the current laws to the Composition Scheme under GST, then again all the input to his credit under the current laws shall lapse.
Can a person who has opted to pay tax under Composition Scheme avail input credit on the inward supply of goods and services?
A person who has opted to pay tax under the Composition Scheme cannot claim input credit on the inward supply of goods and services. The input taxes paid on inward supply of goods and services shall be an additional cost to such person.
What type of an invoice should a person opting for the composition scheme issue on outward supplies made by him?
A person opting for composition scheme shall not issue a tax invoice. He should issue a Bill of Supply and clearly mention “Composition Taxable Person, Not Eligible to Collect Tax on Supplies” on top of the invoice issued by him.
The Bill of Supply must have the following details:
- name, address and GSTIN of the supplier,
- a consecutive serial number containing only alphabets and/or numerals, unique for a financial year,
- date of its issue,
- name, address and GSTIN/ Unique ID Number, if registered, of the recipient,
- HSN Code of goods or accounting code for services,
- description of goods or services,
- value of goods or services taking into account discount or abatement, if any, and
- signature or digital signature of the supplier or his authorized representative.
It is important to note that, since a person opting for Composition Scheme cannot issue a tax invoice, he breaks the benefit of transfer of input credit down to the end of the value chain.
What are the returns required to be filed under the Composition Scheme?
| Form Name | Particulars | Periodicity | Due Date | Penalty Provisions |
| GSTR 4 | Details of Outward supplies, debit notes issued, credit notes received, import of goods or services made, invoice wise inter-state and intra-state inward supplies from registered and un-registered dealers. This return should be filed after adding, correcting or changing details, if required in Form GSTR 4A. | Quarterly | 18th of the Month following the Quarter | Any delay in filing of the returns attracts a liability of INR 100 per day subject to a maximum of INR 5,000 |
| GSTR 4A | The details of all outward supplies made by a supplier under a regular scheme has to be furnished in Form GSTR1. If a Composition Dealer has availed any goods or services from other Registered Persons, then he will be able to view the details of his input goods or services in Form GSTR 4A. | Monthly | Between 11th and 15th of every month | |
| GSTR 9A | Annual Return | Annual | 31st of December following the end of the Financial Year for which the Annual Return is being filed | Any delay in filing of the returns attracts a liability of INR 100 per day subject to a maximum of an amount calculated at 0.25% on the Turnover in that State or UT |
What are the accounts and records that need to be maintained by a Composition Dealer?
- Record of monthly production accounts, showing quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products
- Opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and balance of stock including raw material, finished goods, scrap and wastage thereof
- Names and complete addresses of premises where he stores stocks including stocks in transit and stocks stored there in
- Names and complete addresses of suppliers to whom he supplies goods or services chargeable to tax
- Separate account of advances received, paid and adjustments made thereto
- Register of Bill of Supply issued
Click here to try a GST Accounting and Returns Filing tool for free.
What happens if the person under Composition Scheme exceeds the threshold limit of INR 75 lakhs during the Financial Year?
The person shall be immediately liable to pay tax as per the normal rates specified by the GST Law and thereby all the regular provisions of the law will become applicable to him. He will be able to claim input credit on the stock held by him on the immediately preceding day of exercising the option. The stock can be inputs, semi-finished goods, finished goods or capital goods. The date of invoice of the input supplies should not be earlier 1 year from the date preceding the date on which the regular provisions of the law become applicable to him.
Decision making: Composition Scheme vs Regular Tax Levy
We need to understand that the GST Law replaces all the other Indirect Tax statutes in the Country, thereby allowing each supplier to pass on the credit of input tax down the supply chain. This reduces the effect of additional tax burden at each stage from manufacture to trader to the customer and encourages tax levy only on the value addition at each stage.
The thumb rule we could use at the time of making this decision is not to apply for a Composition Scheme if the person is in the middle of the value chain i.e. all the B2B businesses. We could look at opting for the Composition Levy in the case of B2C businesses so far as the benefit of paying tax under the Composition Scheme far outweighs the cost of compliance under the regular scheme and other factors relevant to the business in question.
Illustration 1
Let us take the example of Coir Mats to understand the benefits of remaining under the normal provisions versus composition scheme for the trader under composition levy.
| Under Composition Scheme | Under the Normal Provisions | |||
| Particulars | Amount
(INR) |
Particulars |
Amount (INR) |
|
| Manufacturer to Trader | Manufacturer to Trader | |||
| Sale Price | 100.0 | Sale Price | 100.0 | |
| GST* @ 5% | 5.0 | GST* @ 5% | 5.0 | |
| Total Invoice Value | 105.0 | Total Invoice Value | 105.0 | |
| Trader to End User | Trader to End User | |||
| Cost | 105.0 | Cost | 100.0 | |
| Mark up @ 10% | 10.5 | Mark up @ 10% | 10.0 | |
| Sale Price | 115.5 | Sale Price | 110.0 | |
| Total Invoice Value | 115.5 | GST* @ 5% | 5.5 | |
| Tax under Composition Levy @ 1% | 1.2 | Total Invoice Value | 115.5 | |
In this illustration we can see that, a trader, who is in the middle of the value chain is better of remaining under the normal provisions, where his net tax liability is only INR 0.5 (i.e Output Tax of INR 5.5 – Input Tax of INR 5.0). Whereas under the composition scheme his net outflow on taxes would be INR 0.7 (i.e Output Tax of INR 1.2 – Additional profit of INR 0.5).
Now to this let us add the cost of compliance under both the schemes, being INR 1 under normal provisions and INR 0.5 under composition scheme.
Total outflow under the normal provisions is INR 1.5 and under compositions scheme is INR 1.2, making it more beneficial to opt for the composition scheme.
Illustration 2
Let us take the example of Coir Mats again to understand the benefits of remaining under the normal provisions versus composition scheme for the trader under composition levy if the manufacturer is also under the composition scheme.
| Under Composition Scheme | Under the Normal Provisions | |||
| Particulars | Amount
(INR) |
Particulars |
Amount (INR) |
|
| Manufacturer to Trader | Manufacturer to Trader | |||
| Sale Price | 100.0 | Sale Price | 100.0 | |
| Total Invoice Value | 100.0 | GST* @ 5% | 5.0 | |
| Tax under Composition Levy @ 2% | 2.0 | Total Invoice Value | 105.0 | |
| Trader to End User | Trader to End User | |||
| Cost | 100.0 | Cost | 100.0 | |
| Mark up @ 10% | 10.0 | Mark up @ 10% | 10.0 | |
| Sale Price | 110.0 | Sale Price | 110.0 | |
| Total Invoice Value | 110.0 | GST *@ 5% | 5.5 | |
| Tax under Composition Levy @ 1% | 1.1 | Total Invoice Value | 115.5 | |
In this illustration we can see that, a trader, who is in the middle of the value chain is better off remaining under the normal provisions, where his net tax liability is only INR 0.5 (i.e Output Tax of INR 5.5 – Input Tax of INR 5.0). Whereas under the composition scheme his net outflow on taxes would be INR 1.1.
Now to this let us add the cost of compliance under both the schemes, being INR 1 under normal provisions and INR 0.5 under composition scheme.
Total outflow under the normal provisions is INR 1.5 and under compositions scheme is INR 1.6, making it more beneficial to still continue under the normal provisions.
Illustration 3
Let us take the example of a restaurant that is eligible to opt for the Composition Scheme based on our earlier discussion to understand the benefits of remaining under the normal provisions versus composition scheme.
In a restaurant business, we should be aware that there will be a certain amount of exempt/ nil rated inputs. Let us assume the value of these inputs to be 20% of the total inputs and the tax rate for the remaining inputs to be 18%.
| Under Composition Scheme | Under the Normal Provisions | |||
| Particulars | Amount
(INR) |
Particulars |
Amount (INR) |
|
| Total Value of Inputs | 62.5 | Total Value of Inputs | 62.5 | |
| Tax on 80% of Inputs at 18% | 9.0 | Tax on 80% of Inputs at 18% | 9.0 | |
| Total Cost | 71.5 | Total Cost | 62.5 | |
| Mark up @ 40% | 28.5 | Mark Up at 40% | 25.0 | |
| Sale Price | 100.0 | Sale Price | 87.5 | |
| Composition Levy at 5% | 5.0 | GST* at 18% | 15.8 | |
In this illustration we can see that, the net benefit for a person under the composition scheme is INR 1.5 (i.e Output Tax of INR 5.0 – Incremental Gross Margin of INR 3.5). Whereas under the normal provisions his net outflow on taxes would be INR 6.8, making it more beneficial to opt for the Composition Scheme.
These illustrations are only indicative of how an impact analysis may be done to choose between compliance under the normal provisions and composition scheme. You may have to consider additional factors unique to each business and industry. For example in illustration 2, the final sale price of the product under the composition scheme is more competitive to the sale price under the normal provisions. If the majority of the industry (both manufacturers and traders) are under composition levy, then persons under normal provisions may take a hit on the sales volumes or if they discount the price, then a hit on the profit margins.
(*GST = CGST + SGST)
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can we opt composition scheme if i have stock of iss purchase and willing to pay the tax according to current regime on stock ?
Hi Bharat,
You will not be able to opt for Composition Scheme if you hold stock purchased in the course of inter state trade/ stock transfers or imports. The Act does not provide for a remedy in this situation.
Regards,
Bhavana Nagendra
But I have heard about reverse charge on inter state purchase stock need to pay reverse charge and go for composition scheme
Hi Amrish,
That option is available only for unregistered dealer purchases.
Regards,
Bhavana Nagendra
we have a bakery which is air-conditioned where we also have sitting availability. Now since we arranged sitting for the convenience of the customers will it fall under supply of services or traders. We sell products which fall under different slabs of GST. Kindly help us how we should charge our customers. Should we charge according to the Restaurant Services or charge customers based on the what they buy from us
Hi Seshu,
Yours is clearly a restaurant and food supply service. If your turnover is less than INR 75 lakhs you can opt for composition scheme at 5% tax. If you choose to opt for the regular tax scheme, the tax rate would be 18% under restaurant and food supply service and not by the item sold.
Regards,
Bhavana Nagendra
My turnover in fy 2016 2017 is around 80lakh. But now my sale is dicreeased… its may be around 60 lakh in this f y. Because of this, may i iligible for composition scheme? Vat return for apr to june 17 filed by me is for 13 lakh only.
Hi Mahesh,
You will not be able to opt for the Composition Scheme for the FY 2017 – 18. However, since your turnover for the said year will be less than INR 75 lakhs, you can opt for Composition Scheme from 1-Apr-18 by filing an intimation in form GST CMP 02 in February 2018 or March 2018.
Regards,
Bhavana Nagendra
hi, i am stationery retailer I registered for vat just in june and my expected turnover is only 15 lacs no stock purchased till 30 june.. should i take composition scheme or regular… most of the items are 12% category
Hi Hitesh,
Please could you tell me if you have any other source of income apart from the stationery retail store?
Regards,
Bhavana Nagendra
no other source of income except interest received from fdr about 25000 per year
hello, i am running photocopy and computer printing from same multifunction machines used for photocopy shop registered under tin/vat what are the gst tax rates for my business. photocopy prints comes under service or goods category. can i go for composition scheme
Hi Lalit,
This would be a service taxed at 18%. You will not be able to opt for Composition Scheme.
Regards,
Bhavana Nagendra
but paper is not supplied by customer.. i think it will cover in hsn 4911.. pls check n reply.. it will be under 12% gst goods category
Hi Lalit,
This will be categorised as a service under GST and hence you will not be able to opt for Composition Scheme.
Regards,
Bhavana Nagendra
Mam
Which Type of industries is not coverd under that scheme??
Hi Amit,
All industries under trading and manufacturing are covered. In case of services only restaurant and food supply is covered.
Regards,
Bhavana Nagendra
Hi Amit,
All industries under trading and manufacturing are covered. However, only restaurant service is covered.
Regards,
Bhavana Nagendra
i am a regular dealer under vat. i want to switch over to composition under GST. AS PER MY LAST RETURN I DO NAT HAVE ANY VAT REFUND. dO I NEED TO REVERSE THE INPUT TAX ON STOCK HELD FOR SWITCHING OVER TO COMPOSITION OR I NEED NEED PAY ANY TAX AND SIMPLE FILE APPLICATION FOR COMPOSITION UNDER GST
Hi Sunil,
You will just need to reverse the input tax on stock held at the time of opting for Composition Scheme.
Regards,
Bhavana Nagendra
We are a manufacturing concern of kids wear garments. We get printing, embroidery and stitching done from job workers who are not registered. If the job workers opt for composition scheme, then we have to pay GST on reverse charge for getting job work done from them? Is that correct? Is it beneficial for us to get them registered?
Hi Tripti,
If any purchases are made registered person under Composition Scheme, then you do not have to pay tax on the charges paid to them on reverse charge. Job workers cannot opt for Composition Scheme.
If they are not registered, you need to add them as your place of business before moving any goods to them for getting work done. Also, you will have to pay tax on RCM for charges paid to them.
Regards,
Bhavana Nagendra
I run a photography Studio ans my turnover is less than 75 lakhs, can i opt for composition tax
Hi Prashanth,
This is a service under GST and the only service allowed to opt for Composition Scheme under GST is Restaurant Services. Hence you will not be able to opt for Composition Scheme.
Regards,
Bhavana Nagendra
Hi Bhavana,
I am a govt nd army order supplier and in my business i just issue retail invoice at the point of sale. my current turnover is around 45 lakh yearly, all my sale generally are interstate…. my question is can i opt for GST composition scheme when all my sales are retail invoice sales to different govt department .
Hi Robin,
Since you are engaged in inter state sales, you cannot opt for Composition Scheme.
Regards,
Bhavana Nagendra
We r running general store n turnover is around 55 lakhs.will composition scheme will be beneficial?We r dealing mostly taxeable items
Hi Jatinder,
If your store has to sell goods at the fixed MRP, you can go in for Composition Scheme.
Regards,
Bhavana Nagendra
Hi mam
We have bar n restaurant opened recently. We serve food n even liquir n our agrreegate turnover for the year will not cross above 75 lakhs. So we are eligible to opt for composit scheme of gst .
Hi Jitendra,
You will not be eligible for Composition Scheme if you are serving liquor.
Regards,
Bhavana Nagendra
Hi, we regularly offload our work on Job Work basis to local Job Work Companies.. Please give detailed information on Composition Scehme of GST on Job Work.. Like what is the Total Limit of Turnover that can be done by the Job Work Company under Composition Scehme.. Also what would be GST payable by him to Govt.. And can he charge us the GST on his Invoices submitted to us or he will have to bear by himself.. Thanks
Hi Aditya,
A job work is classified as service under GST and the only service provider who can opt for Composition Scheme under GST is Restaurant and Food Supply. Hence a Job Worker cannot opt for Composition Scheme. Since he has to register under the normal provisions, he has to collect the GST from you on the invoices issued to you.
Regards,
Bhavana Nagendra
Hi Bhavana Ji
Please confirm tax rate for mithai Wala sweets in composition scheme 1℅ or 5%
Hi Deepak,
If you are providing seating and/or delivery services, the 5%. If it is just sale of sweets over the counter 1%.
Regards,
Bhavana Nagendra
I am having Mobile Recharge commission income only. Companies requires GST registration number. But my commission not more than 1 lakh per annuam. Can I get to required GST Number.What is the rate I have to charge to customer
Hi Prashant,
Do you have any other source of income? If yes, once you register under GST, all your incomes will be liable to GST.
You can get a GST registration number and file your returns through the nearest GST Facilitation Centre. You will have to charge GST on the commission you earn from the Companies. No GST on the customer.
Regards,
Bhavana Nagendra
Can a composition dealer purchase goods from out side states
Hi Anish,
The only restrictions are you should not make an interstate sale and you should not hold stock from interstate purchase on 1st July. So yes you can make inter state purchases under the Composition Scheme.
Regards,
Bhavana Nagendra
What about RWA’s with turnover more than 20 lacs in a year ?
Hi Sanjay,
Please do email me your contact details to discuss this further.
Regards,
Bhavana Nagendra
We are in fabrication of grill and windows, As small scale industry.
Let me know can I go for composition tax and what the laws applicable?
Thanks
Hi Ismail,
It is a service and hence you will be liable to GST under the regular scheme.
Regards,
Bhavana Nagendra
Hi, I am a textile dealer and manufecturer of readymade garmments. My business is B to C. I have taken composition scheme, Can i sell goods to end customer who comes from other other state or country? Some times it happends that goods are not available but customer makes entire payment and takes bill of supply from me with the commitment of goods will be couriered to them. can i courier goods to end customer interstate pls reply.
Hi Zoher,
What you have mentioned is inter state sale. One of the restrictions of Composition Scheme is not to be engaged in interstate supply. Request you to reconsider your option for Composition Scheme or re-structure your transactions to comply with it.
Regards,
Bhavana Nagendra
I am a manufacturer of cold drink and my turnover is 40 lakh .Can I opt composite scheme.
Hi Amit,
Yes you can. Please ensure all the other conditions are satisfied as well.
Regards,
Bhavana Nagendra
What will be applicablity of composition scheme on second hand car dealers if they are involved in only intra State trading . Wht wi be aggregate turnover his margin or total sales value?
Hi Archit,
Please send me your contact details so we can schedule a call and discuss your business model so I am better placed to help you with this question.
Regards,
Bhavana Nagendra
i am doing business of provison store and my total turnover is 40 lakhs out of which 25 lakhs are taxable and 15 lakhs are tax free .. so if i select composition scheme then i have to pay tax on 25 lakhs or 40 lakhs.
Hi Prakash,
Tax will be payable on INR 40 lakhs.
Regards,
Bhavana Nagendra
Hi I want to know GST tax applicable to input or output or total turnover can you help me
Hi Harish,
Sure I can. Please send me your contact details so we can schedule a call to discuss the details.
Regards,
Bhavana Nagendra
Hi I am grocery and Mobile recharge retailer. may i iligible for composition scheme? I want to know mobile recharge come under service or goods.
Hi Jogmoy,
Mobile recharge is a service and hence you will not be able to opt for composition scheme. If you have only a grocery store under your registration/ PAN then you may opt for the Composition Scheme.
Regards,
Bhavana Nagendra
Hi Bhavna Mam, We are registered under GST and are in service field. If we purchase goods from supplier who is under composition scheme, what would be tax implication on us? Need we take any declaration from the supplier about he availing composition scheme? Regards.
Hi Mr. Desai,
There is no tax impact on you. The invoice of the Composition Dealer must state that he is selling goods under the Composition Scheme. You do not need any other document apart from this.
Regards,
Bhavana Nagendra
We run printing press and rubber stamp shop which comes below 50lacks turnover. Our business is only with Tamilnadu state. Our job structure is, buying paper from paper shops and getting printing works from other printing press (not by us), and sold as printed binded letter heads, printed covers and multicolour brouchers to our clients. And Rubber Stamps, we made by us using our machines.
Whether can we opt in composition scheme?
Hi Venkat,
Sure you can. Please ensure all other conditions under the scheme are comlied with.
Regards,
Bhavana Nagendra
I am trader and have business of ready made tobacco products wholesaler…can i opt for composition scheme?? You have told that any traders can avail this scheme,Is there any rule that traders of some products can not avail composition scheme like ready made tobacco products??
Hi Pragnesh,
GST is not applicable for the following:
a. Manufacturers ice-cream, pan masala or other tobacco products and tobacco substitutes
b. All service providers except restaurant and food supply.
Anyone except the above can opt for Composition Scheme.
Regards,
Bhavana Nagendra
Thank you mam for your valuable reply..I just want to know that my sale is only my state not intrastate selling but can i make purchase intrastate in composition scheme??
Hi Pragnesh,
Yes you can.
Regards,
Bhavana Nagendra
hi pragnesh patel
you are eligible for composition scheme
Mam iam owning a bakery where I purchase raw materials and manufacture bakery foods like bread,buns,khari,rusks,cakes,puffs,sandwich, burgers n sweets,etc..In the same time I even purchase biscuits, chocolates, chips,cold drinks,icecreams n some snacks. .. Please suggest me where n under what GST scheme I have to register, Whether under composition or regular. .where my transaction is somewhere around 200000 lakh to 2500000 lakh per annum. .
Hi Gourishanker,
You can opt for composition scheme provided you comply with all the conditions necessary under Composition Scheme.
Regards,
Bhavana Nagendra
Hi, bhavna madam
I am having restaurant which has partly air condition facility but my turnover is less than 75 lakhs can I opt for composition scheme please reply
Hi Ninad,
Sure you can. Please ensure the other conditions are met.
Regards,
Bhavana Nagendra
If there is unregistered purchases still RCM applicable for dealer under composition scheme
Yes Ram.
Regards,
Bhavana Nagendra
if there is dealer of bakery product who produce the bakery product as well as sell the Bakery product then which rate is application for composition scheme i.e. for manufacturing 2% or Trading 1%
Hi Dimple,
Effectively you are making money out of the trading activity, hence 1%.
Regards,
Bhavana Nagendra
Manufacturing of bakery item are liable 1% or 2% ? Plz recheck
Hi Ankur,
This completely depends on the nature of activity you are carrying on. Please get in touch with your Chartered Accountant for any clarifications you need or feel free to email me your contact details with a scheduled time for a call to discuss the details to give to the correct rate.
Regards,
Bhavana Nagendra
We are franchisee of branded Ice Cream and running a parlour. Whether we will be covered under trader category of Composition scheme of GST.
dear madam,
We have registered under GST , if we made purchase any items from a person who opted composition scheme whether we have to pay tax on reverse or not. The person ( composition shceme dealer ) is not charging any tax , but the registered person has to pay tax on reverse or need not to pay any taxes. if yes , kindly let me know the tax rates.
Thanking you,
Hi Rajagopal,
You do not have to ay tax on reverse charge basis for purchases made from a composition dealer.
Regards,
Bhavana Nagendra
Hii Maam,
We are running medical foundation which is registered under companies act, 2013 and polyclinic diagnostics in the same premises and having Turnover below 75 lacs in preceding year, so can we opt for composition scheme under GST. What will be the conditions for billing & invoices for patients.
Hi Bhavana,
Thank you for nice article. If I opt for Composition scheme can I sell the goods at MRP printed which will includes all taxes.
Thank You
Hi Essar,
Yes, you can.
Regards,
Bhavana Nagendra
if there is dealer of bakery product who produce the bakery product like bread and puffs as well as sell the Bakery product with the service of providing tea & Coffee (having seating arrangement) then which rate is application for composition scheme i.e. for manufacturing 2% or Trading 1% or food & restaurant service 5%
Hi Rakesh,
5%.
Regards,
Bhavana Nagendra
hi mam
I recently registered under GST as a composite dealer. Earlier i was not registered under any law. i would like to know whether i have to pay tax on goods lying in stock as on 30 june or not? if yes then what is the procedure.
Please check our YouTube tutorials in https://www.google.co.in/url?sa=t&source=web&rct=j&url=%23&ved=0ahUKEwjK6eCxyLHVAhXEYo8KHb1HCgQQxa8BCC4wCQ&usg=AFQjCNF1sHlk2z9QIx28jtvfnGP_UlkifA
Hi,
I’m registered under composition scheme and selling uniform clothes in Delhi.
If a registered person come from UP & Haryana to purchase uniforms form my shop, Can I bill to them at their UP/Haryana address and by writing Place of delivery at counter sale on Bill of Supply.
Hi,
If you are registered under the Composition Scheme, you cannot make inter state sales.
Regards,
Bhavana Nagendra
Hi , I am dealer in immitation jewellery and my turnover is less than 20 lakhs.But still I have registered as composit dealer , is it is ok and good for my business.What is tax rate for Immitation jewellery.
Hi Kaleel,
1% under Composition Scheme.
Regards,
Bhavana Nagendra
My turn over is less than 20 lacks around 18 Lacks .if I will be a composite dealer .so the percentage of tax I have to pay?
I am a trader.
Hi Prasun,
1%
Regards,
Bhavana Nagendra
I have a turnover of around 65 lacs and most items are under 28% GST as i deal in electronic goods LED Ac W/machine and all.My other sources of income in my file is rental and interest received and electronics Repairing. should i go in Composition… Is that a good choice for me…
Hi Vickey,
Whether or not to choose Composition Scheme would require an impact analysis of the outflow net off input credit under the regular provisions vs Composition Scheme and other factors that have an effect on your business.
If you need this done, please email me your contact details with a scheduled time for a call to discuss the details we need to do it.
Regards,
Bhavana Nagendra
Sir ..
I started new businesses of readymade garment in composition scheme now i m paying 40000/ monthly rent to unregistered landlord….i want to know gst liability on rent paid by me
Hi Vijay Kumar,
You will have to pay 18% on INR 40,000 on reverse charge basis.
Regards,
Bhavana Nagendra
I am not registered under Vat or service tax and my turnover in previous year 16-17 was 45lakh but from 1st April 2017 to 30june2017 is 10lakh then can I wait for gst registration until it goes to 20lakh and continue my billing with older format(Cash Memo) ?
Hi Mohit,
Yes you can.
Regards,
Bhavana Nagendra
Hi Bhavna,
Please let me know the effective date to calculate aggregate turnover for composition scheme. Whether it’s start from 01-07-2017 to 31-March 2018 or from 01 April 2017 to 31 March 2018? Please reply
Hi Aaryan,
It is from 01-04-16 to 31-03-17.
Regards,
Bhavana Nagendra
How to carried forward closing stock held on 30/06/2017 from VAT to GST (input carried forward) by classification of rate of tax @ 5.5% and 14.5% if i have got closing stock of Rs.300,000 in respect of automobile spares and accessories with calculation.
Hi Shabbir,
Please read transitional provisions relevant to you in the below link.
http://www.reachaccountant.com/erp-software-pos-software-blog/transitional-provisions-gst/
Regards,
Bhavana Nagendra
Dear Bhavna,
My father is running a retail grocery store and he also has rental income from renting of immovable property(one house property) for residential purpose. Such renting is a supply of service under GST although it is exempt. Turnover from trading business is less than 75 lakhs. As i know, opting for composition scheme requires that taxpayer shall not be engaged in supply of service. So please suggest whether my father can opt for composition scheme for his trading business or not ? If no, then this would be problem for small traders who also earn rental income from renting even a single flat ?Thanks.
Regards,
Ankit Singhal
Hi Ankit,
Unfortunately he cannot opt for composition scheme. However, you could get in touch with me via email to find alternate solutions to this situation.
Regards,
Bhavana Nagendra
Hi Bhavana
We are a start up firm engaged in the manufacture of floor cleaners. We have opted from composition levy scheme. We don’t collect taxes when we raise a bill of supply to distributor or retailer as per composition levy scheme. However distributor or retailer are they supposed to collect GST (HSN code 3402 – 28% slab for floor cleaners under chapter 34) during sale or can they pass the benefit to customer without taxes . Please clarify. This is affecting my supply chain as few distributors and retailers are reluctant to purchase from us.
Hi Kamakshi,
Only you should not collect taxes on sale. The wholesaler or retailer, if not registered under composition scheme is required to collect taxes at 28% from their customer. You could get in touch with me via email if you need an understanding of whether composition scheme or regular scheme will be beneficial to you.
Regards,
Bhavana Nagendra
I have a computer repairing shop and repairs computers/printers. I have registered my firm under composite scheme. Earlier I was not registered under service tax because my turn over was less than 10000/- . Now what I have to do.
T K Sen
Hi, Madam,
Can Jewellery traders opt for composition scheme?
Hi Hegde,
Yes.
Regards,
Bhavana Nagendra
Hi Bhavana,
Can the dealer registered under composition scheme, switch/change to regular/normal scheme. if yes then what is the procedure for the same.
Hi , if someone has a business of supplying food to offices and also runs a food outlet in a super market, can he opt for composition scheme?
Hi Sudha,
Yes.
Regards,
Bhavana Nagendra
Thanks for a detailed informative article.
I have a textile printing unit. We get fabric, design, colour & chemical from our parties who are located within 10 kms. radius of our unit. We print their fabric using design, colour & chemical provided by them. We resend the printed fabric to them and invoice them with printing charges.
Can I opt for the composition scheme?
Hi mam
Iam running a food stall in premises of cinema in a mall and i have registred my self in gst and have taken GST CERTIFICATE and turn over is less than 20 lacs and i have opted for composition scheme
Cinema owners are putting gst @18% on my rented amount,
what % gst to be paid by me to cinema owner. Can i charge gst@18% on food items iam selling on my food stall?????
Or let me know if any better solution
Plz let me ASAP
REGARDS
SUDHIR
8009192254
i am purchasing the nil rated, exempted or non gst goods from composition dealer . where is showing the entry in gstr 2. head in purchase from compision dealer or head in nil rated item, exempted item or non gst item . what is suitable head
Hi Bhavana,
If you can provide me your email address ?
Regards,
Ankit Singhal
I opt composition scheme before 10 day but now i reliase i am not able for composition scheme.i have no old stock and no bill is issued in july so how can i leave composition scheme.
Can a normal tax payer buy goods from dealer who opt composition scheme and can he avail tax credit?
If I opts for a composition scheme. My sale of goods is Rs. 5,000 taxable goods, Rs. 2,000 exempt goods and Rs. 1,000 tax free goods in GST. Now the question weather I need to pay 1 % on Rs. 5,000 or on Rs. 8,000 ?
If I opts for a composition scheme. My sale of goods is Rs. 5,000 taxable goods, Rs. 2,000 exempt goods and Rs. 1,000 tax free goods in GST. Now the question weather I need to pay 1 % on Rs. 5,000 or on Rs. 8,000 ?
Sir/ mam can anyone tell me what was the last date to apply in composition or input output scheme?
Thanks
Hello mam,
I buy auto part from Delhi and sell them in Bihar only. My turnover is less than 30 lacs. Am I eligible for composition scheme. I have already registered for GST.
1st que:
Can composition dealer avail service if job work? N
2nd que:
If job worker do job work on plain cloth n deliver to client after when job work done but client reject such goods then what is the treatment for the same in the books of Job worker in terms of ITC and Stock N Gst liability?
kuber mam iam running printing bussness but only job work and out sorces all sort of printing i have small office to do dtp work weather i come under composition gst tel me pls ternover yearyly around 3.5 lachk
I run a business involving trading in goods with a turnover between 20 to 30 lakh. I have opted for composition scheme. However afterwards I realised that I also have rental income of rs 75000 per annum. What do you suggest?
I am a small manufacturer of chocolates. I opted for composition scheme. what happens when I sell to a large store complying with regular GST? do they have to pay 28% GST on tax return. I cannot give hime more than 30% margin. I am frustrated.
Hi mam
I want to cancel the composition scheme and migrate to regular dealer what i hav to do??h
hello mam,
i have query that if a dealer have income from interest in his trade business then he is eligible to opt composition scheme under gst act or not
I am a government supplier can I opt composition scheme under gst, my turnover below 75 lakhs.
i am only supplying in my state. ….
hi bhavna, can a photo studio operator / owner opt for composition scheme?
what’s state code do I need to mention in my BILL of Supply I am composite dealer and Do it need to mention HSN code? and pls one more what’s difference between unit and QTY
Regards
my father is keeping hotel ….were our accountant didnot register for compounding tax ….due to this other accountant is saying that we have to go for GST …..if in case the webportal opens for Compounding tax then at that time we can go for it ……………but my father got confused …he didnot know wat to do
Mam I deal in kids garments n have interstate purchase,but at d end of June my stock is nominal amount.my turn over is below 20lacks.can I go for composition or should I cancel my registration as turn over is below 20 lacks
Hi Bhavana,
I was on Composition tax under VAT(Karnataka). Is my registration automatically in composition? What is the rate of Composition Tax on Plant & Machinery?
Kantaraj T
9845019715
I have opted for normal scheme and i want to shift in composition scheme. In current year they are saying no for the same. Can i get amother registration number of the same party and will opt for composition scheme and the old number i will apply for cancelation. As of now there is no such procedure for cancellation so should i continue to file NIL return under regular scheme and actual tax under compaition scheme?? Please help. Thank you
Smit kotak
Hi Bhavana,
We manufacture plastic pipes used in agriculture. We have opt for composition scheme. But from whom we purchase raw material is also under composition scheme. So do we have to pay any reverse charge on it. Both of us are manufacturers. Please suggest what process would be there under composition scheme.
I have an monthly income of Rs. 5 Lacs from a rent of commercial business place. Can I have taken GST Regn under composite scheme?
HI I M BANTI … I have a wholesale readymade garments shop .. I m in GST composition scheme. My question is can I purchase clothes from other state in this scheme ? Likes DELHI OR KOLKATA.. MY SHOP IN ASSAM LANKA…
Will the printing business eligible for opting composition scheme?
Doubt is firm registered as regular and unfortunately on august 16th opted composition scheme mistakenly.
Suggest how to switch to regular.
I have a Printing press where in i purchase paper ink and other allied items from the supplier and then print forms or bill books, boxes,flex etc . Whether i am eligible for composition ?
Hi Bhavna,
I have my retail outlet of sweets and namkeen.Here all the sweets and namkeen were manufactured my me and i have. Confusion of gsts rates under composition scheme can u tell me the gst rate category for me 2%or 5%
Hi…
Is the composition scheme available for boutiques as they both service provider and Traders…???
Dear,
Madam we are registered manufacturer under
Composition scheme, ( under tax slab of 5%, on regular course) we raise our invoice without tax, did our registered dealers/retailers are liable to pay tax on total invoice value of without tax,( ours)
will there rate will be the 5% as of
Regular course, or they are also responsible to
Not collect any tax on their invoice.
Pls reply 7500244022 or mail me. skarnataks@gmail.com