Composition scheme for small traders
(Similar provision in Section 16 of Delhi Value Added Tax Act, 2004)
If any dealer is having turnover UPTO ` 50 LAKHS, he may apply for Composition Scheme.
Composition Scheme is not allowed in the following cases:
(i) If any dealer is procuring goods from outside the State or is selling or supplying goods to any place outside the State at any time during the year.
(ii) If he is registered under Central Sales Tax Act.
Salient features of the Scheme are asunder:
(i) A dealer covered under Composition Scheme is not allowed to take VAT Credit on his purchases but he must retain all the tax invoices for the goods purchased by him.
(ii) A dealer covered under composition scheme is not allowed to issue tax invoice and also not allowed to charge any tax from the buyer rather he himself has to pay tax on his sales turnover ( @ 1% in Delhi).
(iii) The benefit of composition scheme is that dealer is exempt from maintaining lengthy records required under VAT.
(iv) If any dealer is purchasing goods from a dealer covered under composition scheme, no VAT credit is allowed to such a purchasing dealer.
(v) If any dealer is covered under composition scheme, he must purchase goods only from registered dealer.
(vi) If turnover has exceeded `50 lakhs, he has to shift immediately to the normal system.
(vii) If any dealer is covered under composition scheme, he may reject the scheme and may opt for normal procedure but only from beginning of the year.
(viii) If any dealer is opting out of the composition scheme, he will be allowed VAT credit for the stock held by him on the date of opting out.
A dealer has to apply in the prescribed form for opting the scheme and rejecting the scheme
A dealer opting for composition scheme has to apply in Form No. DVAT 01 under DVAT Act, 2004