Background
Sec. 10 of GST laws provides bit of relaxation from
huge tax compliances and encourages small scale business to enjoy lower tax and
compliances through Composition scheme. However, this restricts to do businesses
within the state (no inter-state business).
Advantages
Ø
Small businesses and starts ups can easily opt
this scheme and escape from maintenance of books and tedious tax calculations
Ø
Not required to raise taxable invoice under GST
Ø
Only two returns Quarterly and Annual (GSTR – 4
and GST R –9A)
Applicability
Any business dealing only in
GOODS can opt for composition scheme (Retaurants also can opt). Also, not
applicable for e-commerce business (but still we call Digital India)
Eligibility
Turnover in preceeding year
not exceeding Rs. 75 Lacs
Registeration & Maintanance of books of accounts
Registeration is must for
composite dealers. Need not to mainatain books of accounts
Rate of Taxes
Manufacturers – 2% (1% CGST +
1% SGST)
Suppliers (only Food items
excluding Alcoholic liquor) – 5% (2.5%
CSGT + 2.5% SGST)
Other Supplies (Dealers and
Traders) – 1% (0.5% CGST + 0.5% SGST)
Challenges under this scheme
Ø No input tax credit as not eligible to raise tax
invoice hence, purchaser may not be interested in buying
Ø Restricted to sell out side the state (no Inter –
state sales are permitted)
Ø Tax is a burden on the dealer as this cannot be
recovered
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