Composition scheme under GST

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As we know every regular taxpayer under GST have to file goods and service tax return 1 and return 3b in which they show their existing sale to the government and pay tax on that sale which have made and shown into GSTR1 but there are also a scheme on GST portal in which the taxpayer pay tax according to the rule of composition scheme and pay tax according to sale made and pay tax according to the rule of composition levy.

What is composition levy?

Composition scheme known as the simple and easy scheme under GST for the taxpayers, in which taxpayers no need to show their sales and purchase to the government and pay tax on sales they have to pay tax at the annual basis at the fix rate of the Turnover. This scheme made especially for those taxpayers who have the annual turnover of less than 1.5Crores. at the starting the threshold was just Rs.1.0crore but now it has increased till the annual turnover of Rs.1.5crores. Composition taxpayers have so much of benefits than regular taxpayers as they have less compliances, limited tax liability, low tax rates.

Who can opt composition levy?

The taxpayer who have turnover less than 1.5crores they can easily opt for composition levy. As per the latest GST amendment as per the CGST(Amendment)Act ,2018, the threshold of North-Eastern states and Himachal Pradesh the limit is till 75lakh it mean if the taxpayers have the turnover of 75lakh than only they can opt for composition levy but only if the taxpayer is belong to the north-eastern and Himachal Pradesh. A composition taxpayer can also do the supply of service till the amount of 5lakh or the extent of 10 percent of the turnover, whichever is the greatest.

Who can’t opt composition levy?

These are the following businesses in which the taxpayer can’t have the composition levy. They can only be the regular taxpayer instead of the composition taxpayer.

  • Which businesses do the inter-states supply they can’t opt for composition scheme.
  • The manufacture of the pan masala, ice-cream, or tobacco.
  • Which business supplies goods through online they can’t opt the composition scheme.
  • A non-resident taxable supplier can’t opt for composition scheme.

Which form should be fill to opt for composition levy.

Any taxpayers who want to be eligible for the composition scheme they must have to fill a form GST CMP-02. Any taxpayer can easily fill this form just by going on the GST portal within just 3 steps
Step1:- login to the portal<go to the tab of service<go the drop down list and click on (application to opt for composition levy).

Step2:- Now read the composition declaration and verification and tick on the checkbox than choose the name authorized signatory type the place and click on save button then you get the message of successful and after that you will be eligible for the composition levy

After getting message of successful composition dealer the taxpayer have to fill the GST CMP-02 form within just 90 days. And also they have to fill the form ITC-04 for the purpose of reversing the claimed ITC or they have in the credit ledger.

The GST rates for the composition dealers

Nature of businessCGSTSGST
Manufaturer0.5%0.5%
Restaurants (without alcohol)2.5%2.5%
services3%3%

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