Points to be considered for opting composition scheme

1. WHO CAN OPT:

• Any registered person
• whose aggregate turnover* in preceding financial year did not exceed Rs 75 Lakhs (Rs 50 Lakhs in 9 specified states.) Specified states are: Arunachal Pradesh, Assam, Sikkim, Mizoram, Manipur, Meghalaya, Nagaland, Tripura, Himachal Pradesh.
• who is not engaged in supplying goods not leviable to GST #
• who do not make any inter- state (outside state) sales
• who do not make sale through an e- commerce operator
• who do not manufacture such goods as may be notified by Government. (i.e manufacturer of Ice- cream or edible ice, Pan masala, Tobacco and manufactured tobacco substitute)

2. Composition scheme option is not available to persons engaged in supply of services except:

Restaurant Service (i.e. Composite supply of Food and drink but not Alcohol)

3. Provisions of Sec 9(3) and (4) i.e. Provision relating incidence where tax is payable on reverse   charge shall apply as it is to composition dealers also. (The rate of tax payable on reverse charge will be the rate applicable to the goods or service received by the dealer and not the composition rate.)

4.  Scheme is available on PAN basis i.e if registered person having same PAN have more than one registration by way of business vertical or independent branches units in different states then all of such vertical or units in all states must together be eligible as well as together opt and pay tax under composition scheme.

5. The option of composition scheme shall automatically lapse with effect from the day on which his aggregate turnover during the financial year exceeds Rs 75 Lakhs.

RATE OF TAX

OTHER POINTS TO BE CONSIDERED

1. Composition dealers shall not collect any tax from recipient of supply (i.e. no tax to be charged on sales)

2. Input tax credit ( setoff) not available on purchases.

3.  Dealers will issue Bill of Supply and not Tax Invoice.

4. Composition rate to be applied on Aggregate turnover irrespective of fact  that the item sold is Taxable or Exempt Commodity.

5.  *Aggregate turnover will be computed on the basis of turnover on an all India basis and will  include value of all taxable supplies, exempt supplies and exports made by all persons with  same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess.

6. # Exempt supply or Nil Rate supply are leviable to tax hence if a dealer is engaged in supply of exempt goods as well as taxable goods, he can opt for composition scheme subject to fulfillment of other conditions.