GST roll out shall means a new set of compliance for the industry folk and with small and medium enterprises and start-ups deemed to face challenges in its implementation as well as compliance, the scheme is nothing but an extension of the current scheme under the VAT law.
Composition Scheme Details
Under the GST, composition scheme requires businesses dealing only in goods to file summarized returns on a quarterly basis. To make it more clear, the scheme cannot be opted by businesses offering services and for companies offering goods their taxable income has to be less than Rs. 50 lakhs to fall in this category. Nonetheless, restaurants providing hospitality services can opt for the scheme i.e they are exclusively included within the scope of the scheme.
As per a special grant, businesses registered under the scheme shall dole out tax as specified of their turnover amount, i.e. 1% for manufacturer, 0.5% for businesses providing other supplies and 2.5% for restaurateurs.
Dealers registered under Composition Scheme are not allowed Input Tax Credit
With available benefits, the dealers under the scheme are not allowed to avail input tax credit for the tax paid to the suppliers.
Other provisions laid out for businesses enrolled under the composition scheme
1. Unlike regular taxpayers, the scheme also does away with the requirement for dealers to maintain complete and detailed records i.e. they are exempted from maintaining complete books of accounts.
2. As the composition scheme taxpayers, cant avail tax credit so concurrently he cannot issue tax invoices also.
3. Only one return on a quarterly basis in form GSTR-4 is to be filed and another on an annual basis in GSTR-9A.