Composition scheme under GST
Who is eligible for composition scheme under GST?
A registered person, whose aggregate turnover in the preceding financial year did not exceed Rs.1.5 crores ( as per 23rd GST council meeting), may opt to pay to tax under composition scheme.
A person who is registered under composition scheme in the following states, the turnover limit for opting composition scheme would be Rs. 75 lakhs:
(i) Arunachal Pradesh,
(ii) Assam,
(iii) Manipur,
(iv) Meghalaya,
(v) Mizoram,
(vi) Nagaland,
(vii) Sikkim,
(viii) Tripura,
(ix) Himachal Pradesh
A registered person shall not be eligible to opt for composition levy if such person is a manufacturer of the goods, the description of which is specified in column (3) of the
Table below:
| Sr No. | Tariff item, subheading, heading or Chapter | Description |
| (1) | (2) | (3) |
| 1. | 2105 00 00 | Ice cream and other edible ice, whether or not containing cocoa. |
| 2. | 2106 90 20 | Pan masala |
| 3. | 24 | All goods, i.e. Tobacco and manufactured tobacco substitutes |
Rate of tax leviable under composition scheme:
Rate of tax under composition scheme is as follows:
- 1% of the turnover in State in case of a manufacturer and dealers,
- 5% of the turnover for restaurants (not serving alcohol liquor for human consumption) and
- 1% of the turnover of taxable supplies of goods in case of other suppliers.
Limitations of composition scheme:
Following are the limitations for the persons who are registered under composition scheme under GST:
- Service providers are not eligible for composition scheme.
- he cannot engage in making any supply of goods which are not leviable to tax under this Act;
- he cannot engage in making any inter-State outward supplies of goods;
- he cannot engage in making any supply of goods through an electronic commerce operator;
- he shall not collect any tax from the recipient on supplies made by him;
- No Input Tax Credit can be claimed by the person opting for composition scheme
Other points:
The composition scheme availed of by a registered person shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds Rs.1.5 Crores.
- Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.
- Businesses registered with the same PAN, one business opting for composition scheme and other for regular is not allowed. All either have to opt for composition scheme or regular.
