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Comparison Of Composition Schemes

Comparison Of Composition Schemes

We had COMPOSITION scheme for GOODS manufacturer or trader  – at 1%. Also we already had COMPOSITION scheme for RESTAURANT SERVICE supplier – at 5%. Let us have a Comparison Of Composition Schemes.
 
Now we have , COMPOSITION SCHEME FOR SERVICE PROVIDER   OR   GOODS+SERVICE PROVIDER –  at 6%  for First 50 lacs w.e.f. 01-04-2019 . Notification No. 2/2019-Central Tax (Rate) To give composition scheme for supplier of services with a tax rate of 6% having annual turn over in preceding year upto Rs 50 lacs. Here is our comparison Analysis for benefit all Small scale assesses. 
 

 

Composition for goods manufacturer or trader SECTION 10

Composition scheme for Restaurants

SECTION 10

Composition scheme  ( mainly for service providers )

 

 

Who can apply?

 

 

Exclusive Goods manufacturer or trader including Manufacturer or trader who supply services to extent of 10% of T/O or 5 lacs . whichever is higher

Restaurants not serving alcohol

Notification No. 2/2019-Central Tax (Rate) issued To give composition scheme for

supplier of services or  provider of  Goods+ service both as bundled supply

for service provider

Who cannot?

Person dealing in

1.      Goods on which GST not laviable e.g. petrol, diesel, Gas., Alcohol

2.      Person supplying exempted goods only

3.      Person supply of service

4.      Person engaged in making any supply through an electronic commerce operator

5.      Non-resident taxable person or  a casual person

6.      Producer of ice cream , Pan masala, tobacco , tobacco substitutes

7.      Person making interstate outward supply.

Person dealing in

1.      Goods on which GST not laviable e.g. petrol, diesel, Gas. Alcohol

2.      Person supplying exempted goods only

3.      Person supply of service

4.      Person engaged in making any supply through an electronic commerce operator

5.       Non-resident taxable person or a casual person

6.      Producer of ice cream, Pan masala, tobacco, tobacco substitutes

7.      Person making interstate outward supply.

Person dealing in

1.      Goods on which GST not laviable e.g. petrol, diesel, Gas. Alcohol

2.      Person supplying exempted goods only

3.      Person supply of service

4.      Person engaged in making any supply through an electronic commerce operator

5.      Nonresident taxable person or a casual person

6.      Producer of ice cream, Pan masala, tobacco, tobacco substitutes

7.      Person making interstate outward supply.

8.      Who has already opted composition scheme u/s 10

Turnover limit

·         New registered who has yet not crossed 1.5 Cr. in current FY

·         Already registered who has T/O less than 1.5 Cr. in previous FY

·         New registered who has yet not crossed 1.5 Cr. in current FY

·         Already registered who has T/O less than 1.5 Cr. in previous FY

·         New registered who has yet not crossed 50 lac in current FY

·         Already registered who has T/O less than 50 lac in previous FY

Rate

Manufacturer à

1% on total T/O

 

Trader à

1% (only on taxable supply)

5%

6%

Do’s & Don’ts

1.      He has to pay tax U/S 9(3) – RCM

2.      He cannot claim ITC.

3.      Apply from 1st march to 31st march i.e before financial year starts

4.      File ITC- 3 in 60 days once applied in CMP-02

5.      Issue “Bill Of Supply”

6.      He cannot sale O/S state

7.      Display of invoices of the words ” composition taxable person, not eligible to collect tax on supplies”

8.      Display of the words “Composition Taxable Person” on every notice and signboard displayed at a prominent place.

 

1.      He has to pay tax U/S 9(3) – RCM

2.      He cannot claim ITC.

3.      Apply from 1st march to 31st march i.e before financial year starts

4.      File ITC- 3 in 60 days once applied in CMP-02

5.      Issue “Bill Of Supply”

6.      He cannot sale O/S state

7.      Display of invoices of the words ” composition taxable person, not eligible to collect tax on supplies”

8.      Display of the words “Composition Taxable Person” on every notice and signboard displayed at a prominent place

1.      He has to pay tax U/S 9(3) – RCM

2.      He cannot claim ITC.

3.      Apply from 1st march to 31st march i.e before financial year starts

4.      File ITC- 3 in 60 days once applied in CMP-02

5.      Issue “Bill Of Supply”

6.      He cannot sale O/S state

7.      Display of invoices of the words ” composition taxable person, not eligible to collect tax on supplies”

8.      Display of the words “Composition Taxable Person” on every notice and signboard displayed at a prominent place

Returns

GSTR -4 Quaterly

GSTR -4 Quaterly

Yet not prescribed

What if T/O limit is crossed in current FY

After crossing 1.5 Cr. T/O limit in current FY, he should convert to normal registration

After crossing 1.5 Cr. T/O limit in current FY, he should convert to normal registration

·         This scheme is for only upto first supply of Rs. 50 lac

·         After crossing 1.5 Cr. T/O limit in current FY, he should convert to normal registration

 

TAX LEVY for COMPOSITION SCHEME

A composition dealer is required to pay tax at a specific rate on total sales. Also, the dealer has to pay tax under reverse charge on specified purchases, purchase form unregistered dealer and import of services.

This means that Total GST Payable on =

Tax on supplies (net of advance and goods returned)
+ Tax on B2B transactions where Reverse Charge is applicable
+ Tax on Import of Services

The rate of Tax on transactions under Reverse Charge, purchase from an unregistered dealer and import of services will be at normal rates, i.e. the rates applicable to the supplies. Rates under Composition Scheme are applicable only to sales of a composition dealer.

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