Composition Scheme under GST

1. CA Suresh Jain

2.  Section Section 9 of the Revised Model GST
Law contains provisions for Composition
Scheme.
 It allows taxpayer to opt for payment of GST
as a fixed percent on turnover.
 Having aggregate gate turnover of < Rs. 50
lakhs. (above Rs. 10 lakhs for North East
india, Sikkim, J&K, Himachal, Uttrakhand and
above 20 lakhs for rest of India)

3.  He has to make an application under GST for
choosing composition Scheme. Without such
information regular tax will be applicable by
default.
 Reverse Charge Mechanism u/s 7(3) would
apply even for such persons

4.  Aggregate turnover includes
value of Taxable and Non-Taxable
Supplies, Exempted and Export Supplies.
but does not include Taxes levied
under GST
Aggregate Turnover to be computed across
all Business Verticals and across the country
for each PAN number

5.  Cannot effect Inter State Supplies, but, can
make Inter State purchases.
 He is not allowed to collect GST
 He will be not be entitled to Input credits.

6.  File only quarterly returns as against 3 or 4
monthly returns.
 Lower tax rate. Expected to be between 1 and
3%. (rate is not yet notified)
 He can just raise bill of supply instead of Tax
Invoice.
 He has to declare only the aggregate turnover
of sales. He is not required to declare invoice
wise details.
 It is beneficial for those where input tax is at
lower rate.

7.  In case of changeover from regular scheme to
composition scheme, the Input Credit
relevant to the opening balance in stock
would be lapsed, but,
 in case of a changeover from composition
scheme to the regular scheme the Input
Credit relevant to the opening balance in
stock would become available and the person
can avail them on selling such goods.

8.  Cannot be engaged in supply of services.
 Cannot make interstate supplies.
 Cannot be engaged in manufacture of specific
notified goods
 Cannot supply goods not taxable under GST
 Cannot supply goods through an e-
commerce operator

9.  Form GSTR-4A Quarterly- Auto-populated
details of inward supplies on the basis of FORM
GSTR-1 furnished by the supplier.
 Form GSTR-4 Quarterly- All outward supplies of
goods and services including auto-populated
details from Form GSTR-4A and tax payable
details. Details of any additions, modifications, or
deletions in Form GSTR-4A should also be
submitted in Form GSTR-4.
 Form GSTR-9A Annual- Consolidated details of
quarterly returns filed along with tax payment
details.

10.  I feel composition scheme under GST is good
only for small businesses and where input tax
is at very lower rate.
 Examples of businesses to whom this scheme
can be beneficial are Retailers.

11. Thank You