GST Composition Scheme provides relief to small businesses in the form of lower rates and lesser compliances. By opting for this scheme, a business can pay GST at a fixed rate, without claiming input tax credit. You can learn more nitty-gritties regarding applicability/eligibility and benefits of this scheme by taking GST classes in Ahmedabad at Super 20 Training Institute (s20.in). Meanwhile, the article here lists down the compliances to be undertaken, should you or your client opt for this composition scheme.
Typical compliances for an indirect tax scheme involve:
In the context of GST composition scheme, these compliances are explained as under:
A. Opt for the scheme
For traders and manufacturer : If turnover is upto Rs. 1.50 Crores p.a.
For Service sector : If turnover is upto Rs. 50 Lacs p.a.
then only a person can opt for composition scheme as the scheme is to benefit small businessmen.
Where a registered dealer desires to opt for composition scheme, typically he is required to do so before or at the beginning of the year, by filing Form GST CMP-02. Where the scheme is opted for in the middle of the year, it becomes applicable from the month following the month in which the form is filed.
Persons applying for fresh registration under GST and opting for composition scheme, may do so by filing Form GST REG-01.
Once a dealer has opted for the scheme, there are two more statements to be filed:
- Form GST CMP-03 – This statement provides information regarding stock and inward supplies held on the day of opting for the scheme.
- Form GST ITC-03 – This statement is required to be filed in order to reverse any input tax credit already claimed on stock of inputs / capital goods before opting for this scheme.
If all these forms and compliances seem daunting, attend GST classes in Ahmedabad to get complete clarity and sort out any queries you may have.
B. maintaining detailed records
The main purpose of the scheme is to provide relief to taxpayers from comprehensive maintaining of records and compliances. Therefore, unlike regular dealers, dealers registered under the composition scheme are NOT required to maintain detailed records. Further, they are NOT required to collect taxes either, as the taxes are paid at a fixed rate out of own pocket. However, the following to-do’s should be borne in mind:
- The dealer must issue a Bill of Supply, and NOT a tax invoice.
- All bills of supplies must state ‘composition taxable person, not eligible to collect tax on supplies’.
- All hoardings outside the office / at other prominent places must clearly state ‘Composition taxable person’.
- Composition delaer can not make any interstate sales.
C. Calculating and payment of taxes
A dealer under the composition scheme should collectcollate the following details of:
- outward supplies on which tax is payable
- inward supplies on which tax is payable on reverse charge
Thereafter, compute tax liability by using fixed (reduced) rates as applicable, and split tax liability equally among the CGST and SGST components. Further, credit of input tax cannot be claimed by a GST composite dealer. Add interest payable (if any).The afore-said details would need to be filled in Form GST CMP-08. Form CMP-08 is a statement-cum-challan required to be filed on a quarterly basis. It summarizes the tax liability of the dealer alongwith other relevant details sought by the government. Due date for payment of taxes as well as filing of this statement is 18th of the month following the quarter for which taxes are being paid.
D. Filing of returns – Quarterly and annual
The quarterly statement in Form CMP-08 mentioned above serves as quarterly return as well (it replaces erstwhile quarterly Form GSTR 4).
An annual return also needs to be filed by a GST composite dealer by 30th April following the relevant financial year.
Law prescribes penalties where there is delay in filing of the returns mentioned above. Super 20 Training Institute offers excellent GST return training in Ahmedabad so that you can ensure that the return filing process for you and/or your clients is smooth and hassle-free.