Demystifying GST Compliance for Composition Scheme Dealers: A Guide for Simplified Taxation
- Published on June 19, 2024
The Goods and Services Tax (GST) revolutionized India’s indirect tax structure, offering a simpler and more transparent system. However, navigating its intricacies can be daunting, especially for businesses opting for the Composition Scheme. But fear not! This blog post will serve as your guide to understanding GST compliances for composition scheme dealers.
MANTRA CO & TAX CONSULTANT is here to simplify your GST journey. We offer a comprehensive range of services, including registration, filing, and expert advice tailored to composition scheme dealers.
Benefits of Composition Scheme
The composition scheme offers several advantages for small businesses with a turnover below the threshold (₹1.5 crore for goods and traders, ₹50 lakh for services). These benefits include:
- Lower Tax Rates: Composition scheme dealers pay a fixed GST rate (1% to 6%) on their total turnover, significantly reducing tax liability compared to regular GST rates.
- Simpler Compliance: No need to file complex tax invoices or collect and claim input tax credit (ITC). This translates to less paperwork and administrative burden.
- Simplified Returns: Composition scheme requires filing only three quarterly returns, compared to monthly returns under regular GST.
Composition Scheme Compliance Requirements
While the composition scheme offers simplified procedures, there are still essential compliances to ensure smooth functioning:
- Registration: Businesses eligible for the composition scheme must register on the GST portal.
- Turnover Limit Monitoring: Ensure your annual turnover stays below the prescribed threshold. Exceeding the limit will automatically disqualify you from the scheme and necessitate migration to regular GST.
- Bill Issuance: Composition dealers must issue bills of supply mentioning “composition taxable person” and not collect GST.
- Payments: Timely payment of the fixed GST rate on your turnover is crucial.
- Record Keeping: Maintain proper records of purchases, sales, and payments for potential GST audits.
Additional Considerations
- Ineligibility for ITC: As a composition scheme dealer, you cannot claim ITC on purchases, which might be a disadvantage if you have significant input costs.
- Inter-state Transactions: Composition scheme dealers cannot make inter-state supplies.
Partnering with MANTRA & CO.TAX CONSULTAT
Managing GST compliance, even under the composition scheme, can be complex. MANTRA & co.
TAX CONSULTAT can be your one-stop solution:- GST Registration and Return Filing: We can handle the registration process and ensure timely filing of your quarterly returns.
- Record-Keeping Assistance: We can help you establish a robust record-keeping system to meet GST requirements.
- Expert Guidance: Our experienced tax professionals can address your specific queries and advise you on whether the composition scheme remains the best option for your business as it grows.
Mantra and Co.
Ahmedabad, Gujarat
[+91 8490849012] | [info.mantraandco@gmail.com]