Composition levy is an alternative method of levy of tax for small taxpayers whose turnover is up to Rs. 100lakhs/Rs. 75 in case of special category states. North east states include Assam, Mizoram, Manipur, Meghalaya, Tripura, Sikkim, Arunachal Pradesh, Nagaland Himachal Pradesh.
The option to pay tax under composition scheme will have to be exercised for all states. Aggregate turnover will be computed on the basis of turnover on an all India basis. Aggregate turnover will include value of all taxable supplies, exempt supplies and export made by all person with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess.
Eligible persons opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter: i) Manufacturers ,other than manufacturers of Ice cream, Pan Masala, Tobacco products - 2% ii) Restaurant Services – 5%, iii) Traders or any other supplier eligible for composition levy – 1%. Persons opting for composition levy will have to pay tax on quarterly basis before 18 of the month succeeding the quarter during which the supplies were made. Composition dealers need to electronically file quarterly returns in Form GSTR-4 by the 18th of the month succeeding the quarter.
Notified suppliers like manufacturer of Ice Cream, edible ice, Panmasala, Tobacco Products cannot opt this scheme. Casual taxable person or a non-resident taxable person Businesses which supply goods through an e-commerce operator. Suppliers whose aggregate turnover in the preceding financial year crossed Rs. 100 lakhs. Persons making any inter- state outward supplies of goods.
No Interstate Outward Supply of goods. Shall not collect tax. Issue Bill of Supply & Not tax invoice. No Input Tax Credit to those who purchase from him. Not engaged in Electronic Commerce. Not be engaged in Supply in services except Food & Drink Service. Write the Words “Composition Taxable Person” on every sign board etc.
Write the words “composition taxable person” on every notice, sign board etc. Write the Words “composition taxable person, not eligible to collect tax” in every bill of supply. All registered person having the same PAN have to opt for composition scheme. If one registered person opts for normal scheme, others become ineligible for composition scheme. Any intimation or withdrawal for one unit is applicable to others units of the same PAN.
Option lapses if aggregate turnover exceed Rs. 100 lakhs. Pay tax at regular rate for purchase from unregistered dealers. Shall file quarterly return in GSTR4 on 18th of the month next to the quarter. From 2018-19 onwards file GSTCMP – 02 before the starting of the Financial year. No need of renewal every year, once availed composition scheme can continue till crosses 100lakhs.
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