Composition Scheme is a simple and easy scheme under GST for taxpayers.

Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover.

Who cannot opt for Composition Scheme?

The following people cannot opt for the scheme:

  • Supplier of services other than restaurant related services
  • Manufacturer of ice cream, pan masala, or tobacco
  • A person making inter-state supplies
  • A casual taxable person or a non-resident taxable person
  • Businesses which supply goods through an e-commerce operator

What are the conditions for availing Composition Scheme?

The following conditions must be satisfied in order to opt for composition scheme:

  • No Input Tax Credit can be claimed by a dealer opting for composition scheme.
  • The dealer cannot supply GST exempted goods
  • The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
  • If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
  • The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
  • The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued by him.