GST Composition Scheme is for small businesses, that do not have high turnover. Compliances are less under Composition Scheme when it is compared with normal GST Compliance. The purpose of this scheme is to promote ease of doing business. The tax rates under Composition Scheme are very less in comparison to normal GST rates. This scheme will be applicable intrastate. This can be opting only by the person who will fulfill its criteria. There are fewer formalities under this scheme in comparison to normal GST formalities. It will definitely reduce the unnecessary burden of high tax on small business holders. In short, we can say that this scheme is a helping hand of the government towards small businesses^[1]. 

Who is eligible for GST Composition Scheme? 

1.     Manufacturer

2.     Trader

3.     Restaurant Services

4.     Other Service Providers 

Turnover Limit

To get rid of unnecessary chaos, the government had set a turnover limit under Composition Scheme. The table below is providing the details of the same-

In the above table, classification is done on the basis of normal states and special states. Special states are Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and  Uttarakhand. All other states except special states are normal states. If turnover will exceed the above-mentioned limit, Composition Scheme will not apply. 

Who is not eligible for GST Composition Scheme?

1.     Supplier of services other than Restaurant Services. 

2.     Interstate Seller of goods. For instance E-Commerce operators. 

3.     Nonresident taxable or casual taxable person. 

4.     Ice cream or other edible ice whether or not contains cocoa in it. 

5.     Pan Masala Manufacturer 

6.     Manufacturer of Tobacco or other substitutes of Tobacco. 

7.     Manufacturer of aerated water. 

Rates by which Tax needs to be paid

The government had decreased the tax rate under Composition Scheme. The high rates under normal GST are 5%, 12%, 18%, and 28%. Similarly, these rates under the new Composition Scheme are 1%, 1%, 5%, and 6%. You can easily make the difference between the new rates and the present rates. This scheme is a boon for small business holders. It will save their noticeable amount of tax, which they need to pay if this scheme is not there. 

Filing needs to be done by Composition Dealers

There is a number of filings that need to be done on time. Otherwise, penalties can be levied.  GST Return Filing is one of them. It is a very necessary and important filing under Composition Scheme. You can complete this filing by submitting the form GSTR-4 and GSTR-9A. The due dates for both of them are 30^th April and 31^st December of next year respectively. There is another important filing that is for the Payment of Tax. CMP-08 is the form that needs to be a summit for the payment of tax. It is a statement cum challan. It will declare the details of the summary of tax payable for a given quarter. The due date for this form is the 18^th of next month succeeding the quarter. 

Conclusion

In the very basic language, GST Composition Scheme is an advantage for small business holders. It will give them a discount on the tax rate. It is very beneficial for small-scale businesses. Normal GST dealers have to file monthly two returns, GSTR- 3B and GSTR-1. Additionally, one annual return that is GSTR-9 and also very heavy tax rates. On the other hand, the Composition dealer needs to file GSTR-4 and GSTR-9A annually and pay tax only quarterly with very fewer tax rates. There is a lot of exemption given to the composition dealer. This option will lapse once you exceed the turnover of 1.5 Crores in the case of normal states or 75 Lakhs in the case of special states. This scheme is a golden opportunity for small business holders. 

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