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Questions and Answers
What is the main benefit of the Composition Scheme under GST?
What is the main benefit of the Composition Scheme under GST?
- Higher turnover limits
- Quarterly filing of Return
- Access to Input Tax Credit
- Reduced compliance cost for small taxpayers (correct)
Who is eligible for the Composition Scheme for goods based on turnover limit?
Who is eligible for the Composition Scheme for goods based on turnover limit?
- Foreign entities
- Unregistered person
- Registered person with an aggregate turnover ≤ 1.5 crore (correct)
- Registered person with an aggregate turnover > 1.5 crore
What is NOT a requirement for suppliers opting for the Composition Scheme?
What is NOT a requirement for suppliers opting for the Composition Scheme?
- Raising a tax invoice
- Quarterly filing of Return (correct)
- Worrying about GST rates
- Issuing a Bill of Supply without tax
Why can't Composition Dealers avail the benefit of Input Tax Credit?
Why can't Composition Dealers avail the benefit of Input Tax Credit?
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Which states/UTs have a lower turnover limit for composition levy for goods?
Which states/UTs have a lower turnover limit for composition levy for goods?
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What document do suppliers under the Composition Scheme need to issue instead of a tax invoice?
What document do suppliers under the Composition Scheme need to issue instead of a tax invoice?
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Study Notes
Composition Levy and Scheme
- The Composition Scheme is a simple and easy scheme under GST that allows small taxpayers to pay GST at a fixed rate of turnover and avoid tedious GST formalities.
Objectives of Composition Scheme
- To bring simplicity to small taxpayers
- To reduce compliance costs for small taxpayers
Benefits of Composition Scheme
- Suppliers opting for the composition scheme do not need to classify goods or services or determine applicable GST rates
- They do not need to raise tax invoices, but must issue a Bill of Supply without charging tax to the recipient
- They only need to file a yearly return (GSTR 4) and make quarterly tax payments
Important Notes
- Composition Dealers cannot claim Input Tax Credit
- Registration under GST is compulsory for opting for the composition scheme
Composition Scheme Eligibility for Goods
- Registered persons with an aggregate turnover of ₹1.5 crore or less in the last financial year are eligible
- Turnover limits for composition levy for goods are: • ₹75 lakh for Arunachal Pradesh, Uttarakhand, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura • ₹1.5 crore for all other states/UTs
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