Composition scheme
iNDRAKUMAR KS (Accounts Executive) (65 Points)
29 September 2016
How to find a vendor belongs to composition schme
iNDRAKUMAR KS (Accounts Executive) (65 Points)
29 September 2016
Ramachandran
(Senior Executive )
(106 Points)
Replied 29 September 2016
Hope this will help !!!
Who is Eligible?
1. You should have a TIN.
2. You should have a turnover of Rs. 10 lakh to Rs. 50 lakh in the past year.
3. All your purchases and sales must be within the same state. Therefore, if even a part of your turnover is from sales to another state or through export, you are not eligible.
4. You may not purchase any goods from a wholesaler/dealer that has already opted for the Composition Scheme.
Why to Opt for Composition Scheme?
Maintaining records, making payments and filing returns is a costly and cumbersome process that may just be asking too much from a small dealer trying to grow a business. For this reason, the Composition Scheme provides a range of benefits to reduce the statutory requirements.
Instead, you pay a fixed rate of tax that is lower than what others would pay, you are not required to file monthly forms and can instead opt for a form that covers a quarter or even a year, depending on the business you’re in. You may wonder why, of course, the government would offer such a scheme. The simple answer is that, in its absence, many small-time traders would not bother registering at all.
No Input Tax Credit
VAT is collected at every step of the trading process. Let’s say wholesaler A sells to dealer B stock worth Rs. 1 lakh. On this amount, dealer B pays VAT of say Rs. 4000. Then dealer B sells to trader C for Rs. 1.2 lakh. Trader C now pays VAT of Rs. 5000. Under the normal system, when trader C sells the goods, for say Rs. 2 lakh, he can collect VAT of Rs. 8000, but must only pay Rs. 3000 to the government (as Rs. 5000 has already been paid to dealer B).
This is known as Input Tax Credit. Under the composition scheme, this is not possible; the entire amount must be paid. After an examination, the money will be returned. For this reason, traders that are purchasing from dealers or wholesalers opt against the composition scheme.
PS => I assumed you were asking for VAT.
iNDRAKUMAR KS
(Accounts Executive)
(65 Points)
Replied 29 September 2016
Dear Mr. Ramachandran Thank you for your reply. It realy helpful to me
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