GST Compliances for Composition Scheme Dealers

GST Composition Scheme provides relief to small businesses in the form of lower rates…

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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.

What is Reverse Charge Mechanism under GST?

GST is an indirect tax, whereby seller recovers tax on goods / services supplied…

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GST is an indirect tax, whereby seller recovers tax on goods / services supplied to the buyer, and then
deposits the tax so recovered to the Government of India. While this is the primary way tax is collected
and paid, there is an exception to this mode, namely reverse charge mechanism.

Under reverse charge mechanism, the buyer of goods / services is required to deposit GST directly to the
tax authorities, and the seller need not collect the tax, nor undertake any related compliances.

These principles can be understood in detail when you join GST classes at Super 20 Training Institute.
However, a brief is provided below to get you started.

History and Genesis

Following the normal process (also referred to as the forward charge) may still leave some
transactions untaxed. In a country as vast as India, with unorganized businesses, reverse charge acts
as an effective mechanism to plug the loopholes and implement the law.

Reverse charge mechanism existed in the pre-GST era as well, i.e. in the service tax regime.


Liability to pay tax on the buyer / recipient of goods and services arises under the reverse charge
mechanism under the following scenarios:

(i) Based on nature of goods / services supplied, or nature of supplier
Some examples are:
– supply of a service by a non-resident to any person in India
– supply of legal services by an advocate to any business in India
– supply of services by a director of a company to the company in India

(ii) Where a taxable supply is made by an unregistered dealer to a registered dealer [applicability
deferred to 30 September 2019]

When a registered dealer procures a taxable good or service from an unregistered dealer, the
liability to pay GST shifts to him under reverse charge mechanism and he is required to pay GST,
instead of the unregistered supplier. The exception to these cases is when the total procurements
by the registered dealer in a day do not exceed Rs 5,000 (whether from one or all unregistered

The above list is only indicative and not exhaustive. You could learn more at Super 20’s GST classes.

Further, where reverse charge mechanism is applicable, GST would need to be deposited on any
advances paid to the supplier too.

Compliances required / Other aspects

A recipient required to pay GST under reverse charge mechanism must obtain GST registration and
undertake all compliances like any other registered dealer.

GST under reverse charge mechanism needs to be paid in cash, and input tax credit cannot be used to
pay the same. However, once paid, input tax credit can be claimed against GST so paid. The exception to this is the case of a GST composition dealer who is generally not allowed to claim input tax credit,
and therefore cannot claim credit of taxes paid under reverse charge mechanism either. Further,
when a composition dealer has to pay GST under reverse charge mechanism, he must pay at full rates
(and not at lower rates applicable to him).

One more important aspect is the Time of Supply – the point when GST is payable. This differs under
reverse charge mechanism from the usual principles under forward charge.

Of course, there are many more technicalities to these provisions. If you have any queries, do reach out
to us and we could guide you further with the right set of GST training that you should opt for,
considering your background, experience and future plans. Super 20 Training Institute offers the best
tax course and would be just the right choice for this purpose.

Creation and Submission of GSTR- 3B | GST Part-V

This is a Part-V of our ongoing GST series of articles. Today we will…

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This is a Part-V of our ongoing GST series of articles. Today we will discuss about GSTR-3B in this article. Though we have an institute which specializes in GST Training, Taxation Training, we believe that the same knowledge should be shared to common public though they are not part of our GST Course or Taxation Course. Ok let us discuss about GSTR-3B.

GSTR-3B is a simplified summary return and the purpose of the return is for taxpayers to declare their summary GST liabilities for the tax period and the discharge of these liabilities in a timely manner

A normal taxpayer is required to file GSTR-1, 2, & 3 returns for every tax period. In case of extension of due dates for filing of GSTR-1 and GSTR-2, GSTR-3B needs to be filed and subsequently if there is any discrepancy between the system generated 3B and earlier filed 3B the taxpayer will have to pay additional tax, liability and other dues. Looks simple huh…? Actually my accountants / professionals find it very difficult to prepare this due to lack of their GST Training and Taxation Training. Hence, they join various GST Courses or Taxation Courses. Hence, as the best GST Training Institute in Ahmedabad and the best Taxation Training Institute in Ahmedabad, we feel that it is our social responsibility to spread such articles among general public for their benefit.

Who needs to file the GSTR-3B?
All normal taxpayers and casual taxpayers are required to file the GSTR-3B every time there is an extension of due dates of filing for GSTR-1 and GSTR-2. At present as per 27th GST Council meeting, GSTR-3B is to be filled till 30th September, 2018.

Where can I file GSTR-3B?
GSTR-3B can be filed from the returns section of the GST Portal. In the post-login mode, you can access it by going to Services > Returns > Returns Dashboard. After selecting the financial year and tax period, GSTR-3B, (if applicable), in the given period will be displayed.

What is the due date for filing the GSTR-3B?
GSTR-3B is to be filed on 20th day from the end of the month for which return is to be filed.

Details in Section – 3.1 Tax on outward and reverse charge inward supplies
Enter the Total Taxable value, Integrated Tax, Central Tax, State/UT Tax and Cess under respective nature of supplies column. In case of other outward supplies (Nil Rated, exempted) and Non-GST outward supplies, the total taxable value imply the total values of such supplies, excluding taxes. In certain cases reverse charge is also applicable. The same is to be filled under reverse charge inward supplies row of section 3.1.

Details in Section – 3.2 Inter-state supplies
In the section Supplies made to Unregistered Persons or Registered persons or composition scheme holder as applicable following information is to be filled.

– From the Place of Supply (State/UT) drop-down list, select the place of supply.

– In the Total Taxable Value field, enter the total taxable value for each State/UT.

– In the Amount of Integrated Tax field, enter the amount of integrated tax. Please ensure that the integrated tax amount provided here does not exceed the integrated tax liability declared. Only integrated tax amount has to be declared, cess amount is not required to be mentioned.

Details in Section – 4. Eligible ITC
Eligible ITC tile in GSTR-3B will reflect the total value of Integrated Tax, Central Tax, State/UT Tax and Cess net ITCs. There are various types of ITC available for the eligible inputs. Normal ITC on purchase of goods is to be filled up in row no. 5 all other ITC.

Details in Section – 5. Exempt, Nil and Non GST inward supplies
Exempt, Nil and Non GST inward supplies tile in GSTR-3B will reflect the total value of Inter-state and Intra-state supplies.

Details in Section – 5.1 Interest and Late Fee

Interest and Late Fee tile in GSTR-3B total value of Integrated Tax, Central Tax, State/UT Tax and Cess.

Note: Late fee for the month includes previous month’s late fee charged due to delay in filing of return. The calculation is [Date of Filing –Due date of Filing)] * 25/day * per Act (CGST/SGST). Late of late fee is Rs. 10/- if no liability accrues during the month. The late filing fees are auto populated and need not to be calculated manually.

File GSTR-3B
From the Authorised Signatory drop-down list, select the authorized signatory then we can file GSTR-3B either by EVC or by digital signature of the signatory.

So guys, next time whenever you have any doubts in this regard, feel free to contact us. We are into Tally Training, Accounting Training, Taxation Training, GST Training. Our Institute is located at Ashram Road, Ahmedabad. We do have Taxation Courses, Tally Courses, Accounting Courses, GST Courses in Ahmedabad for various aspirants.