Composition scheme

You can issue bill of supply

yes , instead of tax invoice ,you have to issue bill of supply mentioning heading of invoice as "bill of supply ". You will not charge any tax amount in your invoice.

yes required to issue bill and in bill also required to mention composition dealer and no sep tax

you have to issues invoice on outwards supplies.
The invoice should contain Bill of supply.
No gst should should be collected by composition dealer on outward supplies by customer.

Yes its mandatary :
As per section 31(3) (c) , has to Issue Bill of Supply,,... And As per the poviso
He may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees .
& the recipient is URD does not require such invoice,
You can issue a consolidated Bill of supply for such supplies at the close of each day .