In this post, we have discussed some of the basic question and their answer on composition scheme under goods and service tax. If you have any query about GST, you can post it here
Q. What is composition scheme under GST in India?
A. GST will be applicable to almost every assessee in the business, thereby increasing the revenue for the government. In this way, to decrease the burden of compliance for small businesses, a composition scheme has been started under GST law where the assessee has to pay the minimum tax rate on the basis of his business.
Q. Who is eligible to choose the composition scheme?
1.The taxpayer whose annual turnover is upto 1.5 crore can choose for the composition scheme.
2. To calculate the turnover for the purpose of the composition scheme, the turnover of all businesses is to be added with the same PAN
3. Manufacturers of goods, dealer and restaurant (non-alcoholic) can choose only for composition scheme.
Q. For a composition dealer, which tax rate is eligible?
1. For manufacturer and traders (goods)
CGST- 0.5%
SGST- 0.5%
Total- 1.0%
2. For restaurants not serving alcohal
CGST- 2.5%
SGST- 2.5%
Total- 5.0%
Service providers are not eligible for composition scheme
Q. Under the composition scheme, Is liability to pay taxes under the reverse charge mechanism covered?
A. Under Reverse Charge Mechanism, A Composition Dealer has to pay tax wherever applicable.
The rate applicable on supply is the rate at which GST will have to pay. This means that the rate under the composition scheme should not be used for reverse charge purposes.
Apart from this, no ITC is available to tax paid for a composition dealer under reverse charge.
Q. Should IGST Interstate purchase pay To attracting reverse charge?
A. IGST should not be paid by a composition dealer. The seller is required to pay tax under reverse charge, import of service or tax under unregistered merchandise, only to pay CGST and SGST.
Q. Should any composition dealer keep detailed records?
A. No, registered dealer under composition scheme is not required to maintain records.
Q. Can it is necessary for composition dealer to avail ITC?
A. No, It is not necessary for composition dealer to avail input tax credit
Q. What are the returns filed by the composition dealer?
A. The taxable person will only have to submit only one return, i.e. GSTR-4 on a quarterly basis and an annual return in form GSTR-9A.
In addition, the automatic prepared statements are not available for a composition dealer for the July-September and October-December quarters. This means that all sales details must be entered by composition sales manually.
Q. Can any composition dealer collect tax from customers?
A. No, composition dealer is not allowed to collect tax