Composition Scheme
The Composition Scheme is a simple tax scheme designed for small businesses and service providers with a turnover of up to Rs. 1.5 crore per annum. This scheme simplifies the tax compliance process and reduces the tax burden for small businesses.
Composition Scheme Eligibility
- Annual turnover of the business should be up to Rs. 1.5 crore.
- Taxpayer must not be engaged in any inter-state supplies of goods or services.
- Taxpayer must not be a manufacturer of any notified goods (Notified goods as of today are ice cream, tobacco, and pan masala)
Note - Non-resident taxable person, registered person for GST on reverse charge mechanism & service providers through E-Commerce platforms are not eligible for composition scheme
Composition Tax Rate
Under the Composition Scheme, the taxpayer is required to pay GST as a fixed percentage of their turnover.
- Manufacturers & Traders of Goods: 1% of turnover.
- Restaurant Owners: 5% of Turnvover
- Service Providers: 6% of turnover.
GST Forms under Composition Scheme
- GST CMP-02: To opt for Composition Scheme.
- GST CMP-03: To withdraw from the Composition Scheme.
- GST CMP-04: To make any changes to the details submitted while opting for the Composition Scheme.
- GST CMP-05: To intimate the tax authorities about any taxable person becoming ineligible for the Composition Scheme.
- GST CMP-06: To pay taxes under the Composition Scheme.