Registration karwalo

Composition Scheme

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Are you a small dealer? and want to do trading business in the state then Composition scheme under GST is the best option for you and Registration Karwalo offers an easy process to get registration.

Composition Scheme

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In VAT System

 

  1. Dealer Should have valid TIN
  2. Dealer has turnover between 10 lakh to 50 Lakhs
  3. Dealer is not allowed to make Inter State Purchases and Sales
  4. Dealer can purchase only from Regular registered dealers i.e. he cannot purchase from unregistered dealer and Composite Dealer as well.
  5. Rate of Tax is much lower than the normal tax rate i.e. 1%, 2% Etc.
  6. Minimum Statutory Requirements like maintenance of Records etc.
  7. Quarterly Returns are required to be filed in Form 17

 

Under GST Regime

 

  1. Applicability:   It is applicable to only those dealers whose Aggregate Turnover in the Preceding Financial Year did not exceed 75 Lakhs. The government may by any notification increase this limit but not exceeding 1 Crore. Please note that where one assesse has more than one branches in a state with the same PAN Number then total of turnover of all such branches should be less than 75 lakhs. Also, he will have to opt this scheme for all branches.
  2. Opt to Pay :   This is Option not compulsory as the Act says Dealer may “Opt to Pay”
  3. Rates of Taxes :  There are three rates in composition scheme
    ​​​​​​1 % for the turnover in case of Manufacturer
    2.5 % the Turnover in case of Supplies referred to Clause (b) of the Para 6 of Schedule II i.e. Restaurant Services and
    ​​​​​​0.5 % of the Turnover in case of other supplies
  4. Meaning of Supplies under Composite Scheme: The registered dealer shall be eligible to opt under this sub section only if:
    a) He is not engaged in the Supply of Services i.e. it is applicable only in case of supply of Goodsexcept “Other than supplies referred in clause (b) of Para 6 of Schedule II (RestaurantServices)
    b) He is not making any supply of goods which are not livable to tax under this act
    c) He is not engaged in making Inter- State Outward Supply of Goods i.e. Inter State Inward Supply or Purchases from outside the state or union territory is allowed
    d) He is not engaged in supply of goods through Electronic Commerce operator who is required to collect tax at source under section 52
    e) He is not manufacturer of such goods as may be notified by the government on the recommendation of council
  5. ​​​​​​Lapse if Turnover exceeds the limit:If the turnover of the dealer during the financial year exceeds the threshold limit then the option for composition will be lapsed and he will adhere to the normal provisions.
  6. 6.No Input Tax Credit to Composite Dealer as well as Buyer:The composite dealer will not be allowed to take any input tax credit on the purchases made him. Also, there will not be any credit allowed to buyer of the goods of Composite Dealer.
  7. 7. Reverse Charge : The CGST act says as per sub section 3 and 4 of the Section 9 which talks about Levy and collection of taxes, that there will reverse charge on the supplies made by Unregistered Person to Registered Person. In such a way if a composite dealer buys any goods from unregistered dealer than he will have to pay taxes on Reverse charge basis and he will not have credit of such paid tax.
  8. Bill of Supply /No Tax Invoice:  The composite dealer will issue Bill of Supply and he will mention in his invoice that he is composite dealer. Also he will prominently mention in his shop/office/Main board that he is a composite dealer.
  9. Casual Taxable Person/Non Resident Casual Taxable person cannot be a composite dealer
  10. Return  : Quarterly returns are required to be filed in Form GSTR - 4

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