Composition Scheme Under GST

GST Composition Scheme under GST

On introduction of GST law w.e.f 1. July 2017, a composition scheme for goods and restaurant services was introduced in the act itself in terms of section 10 of CGST act 2017. This scheme was meant for small and tiny taxpayers to make it easy for them to comply with provisions of Gst Law. Dealers whose aggregate turnover didn’t exceed ₹1.5 Crore in the previous year comes under the composite scheme and pay GST at a lower or fixed composition tax rate on their turnover. LEX N TAX ASSOCIATES provides service of Composition scheme under GST.

You are not Eligible for composition scheme if you:

  • Are a casual taxpayer person
  • Are a non-resident taxable person
  • Are Engaged in supply of goods which are not leviable to tax under GST Act
  • Are having other registered with PAN, unless all such registered units opt to pay tax under composition scheme
  • is a supplier of services (with an exception to food and beverages for human consumption)
  • supplies goods through an e-commerce operator
  • supplies goods interstate

you can avail benefits of This composition scheme if you:

  • are otherwise not eligible to existing composition scheme under section 10 of CGST Act, of goods and restaurant services.
  • Had opted for this scheme upto 30th September,2019 for the year 2019-20.
  • Have opted for the scheme upto 30th June 2020 for the year 2020-21.

You can not claim these benefits in Composition scheme:

  • No Input Tax Credit can be claimed by a dealer opting for a composition scheme
  • The taxpayer can only make intra-state supply (sell in the same state) no inter-state supply of goods
  •  Composition dealers cannot supply GST exempted goods.
  • The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
  • The taxpayer has to mention composition taxable person on every notice or signboard displayed prominently at their place of business
  • The dealer should also mention “composition taxable person, not eligible to collect tax on

supplies” at the top of the Bill of Supply

Composition scheme under GST rate is a standard lower rate of tax, which is specified as follows:

Type of Dealer  Tax Rate
Manufacturer & Traders  1%
Supplier of food or drinks for human consumption5%  
Others  6%  


Dealers working under both composition scheme are now required to furnish a simple statement every quarter, containing the details of payment of self- assessed tax in FORM GST CMP-08, till the 18th day of the month succeeding such quarter.

Furthermore, they are required to furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4 till the 13th day of April following the end of such financial year as against quarterly return.

Following points are required to taken into consideration while filing CMP-08:

  • The taxpayer shall make payment of tax on quarterly basis by due date.
  • Adjustment on account of advance, credit/debit notes rectification shall be reported against the liability.
  • Interest shall be leviable if payment is made after the due date.
  • ‘NIL’ statement shall be filed if there is no tax liability due during the quarter.

GST Tax Payment

A dealer who is registered under the Composition Scheme of Goods and Services Tax has to pay a fixed percentage of tax on the total turnover (outward supplies made). This is because the composition dealer is not eligible to claim the Input Tax Credit (ITC).

For example ARVIND SALES, are the dealers registered in the supply of furniture. The company is liable to pay 1% GST on the total turnover. Central Tax at 0.5% and State Tax at 0.5%

Following is the timeline for payment of tax under the GST tax regime:

Type of DealerDue Date
Composition18th of the subsequent quarter

Our firm LEX N TAX ASSOCIATES provides service of Composition scheme under GST with expert team and with effective cost benefit. We are leading taxation firm in Delhi and NCR. For more query kindly visit our website.   

~by Aanchal sharma

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