GST Composition Scheme and How Will It Benefit You?

Now, a new tax regime naturally brings in a new set of compliance to be followed by traders and manufacturers. But although big organizations are backed by needed expertise & resources to easily sign up with the new compliance procedures- yet it’s not exactly the case with the SMEs and start-ups. Small businesses come with limited turnover and will seemingly face difficulties in keeping up with the compliance procedures of the latest taxation system. In that light, the Section 10 of GST law has introduced the revolutionary Composition Scheme online trademark registration.

What is GST Composition Scheme?

GST Composition Scheme has been introduced to reduce the compliance burden for the small businesses in India. Those who will enroll into the particular scheme will pay taxes at the minimum rate on the basis of his/her business turnover. Such a system assures greater compliance ease without a load of maintaining elaborate tax records.

Who is eligible for GST Composition Scheme?

A taxpayer would be eligible for GST Composition Scheme if his aggregate turnover is limited to Rs. 75*(RS. 50 lakhs for notified states) lakhs in one Financial Year. However, a dealer enrolling into Composition Scheme is not allowed to take Input Tax Credit Immigration services integrating highly skilled tax preparation with reliable and personalized service, Unidos Tax & Immigration Services helps Visalia residents achieve their financial goals...

Benefits of GST Composition Scheme for traders and manufacturers

Less compliance burden

A normal taxpayer is required to file at least 37 returns a year under GST- 3 returns every month & 1 annual return. If he fails to comply, he would be subjected to the penalty. But the Composition Scheme eliminates the need for so many returns and replaces the system by just 4 (quarterly)+ 1 annual return in form 9A  returns a year. RETURN IN FORM GSTR-4

  • 1st quarter- July 18
  • 2nd quarter- 2nd October  IT IS 18TH OCTOBER
  • 3rd quarter- January 18
  • 4th quarter- April 18.

 Lower tax liability

Traders and manufacturers who will enroll into Composite Scheme will also benefit from a nominal tax rate. It would be-

  • 1 (1cgst+1sgst = 2)percent for manufacturers
  • 5 (2.5+2.5 =5)percent for restaurants
  • 5 (0.5+0.5 = 1)percent for the other suppliers under the Composition Scheme

Let’s discuss the situation with an example:

Say we have two taxpayers- Mr. A (normal taxpayer) and Mr. B (taxpayer under Composition Scheme). Both of them have incurred a total sale value of Rs. 118000. Now, when it comes to Net GST liability, Mr. A would have to pay Rs. 6300 while Mr. B would pay a far lesser Rs. 2314.