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Questions and Answers
What is the main benefit of the Composition Scheme under GST?
Who is eligible for the Composition Scheme for goods based on turnover limit?
What is NOT a requirement for suppliers opting for the Composition Scheme?
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?
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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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Description
Learn about the Composition Scheme in GST, designed for small taxpayers to simplify tax formalities and pay GST at a fixed turnover rate. Explore the objectives and benefits of the Composition Scheme, including reduced compliance costs and simplified tax classification.
