18 Mar 2019Posted By: Mudit Handa

15 Frequently Asked Questions on New GST Composition Scheme

Up till now, all those citizens who have opted for GST Registration in the Composition Scheme are required to fulfil the quarterly GST return filing procedure in Form GSTR-4. With a view to further increase the convenience of the Composition taxpayers, the GST authority has recently presented a key amendment in the structure of the GST Composition Scheme.


At the 32nd GST Council meeting, it was decided to put in place the all-new GST Composition Scheme for services and mixed supplies for goods & services. This will be brought into practice from 1st April 2019. The threshold limit for annual turnover in order to opt for GST registration under the new composition scheme is having ₹50 lacs.

Let us now understand the fundamental aspects of the new GST composition scheme.


#1. How much shall be the turnover for the New Composition Scheme?

The Annual Turnover in the Preceding Year (i.e. FY 2018-19) must be up to ₹50 lacs.


#2. Whether the old & new Composition Scheme can be opted together?

No. Only those persons are allowed to take GST registration under the new composition scheme, who have not opted for composition scheme u/s 10(1) of CGST Act 2017.


#3. What if I deal in exempt supplies?

In that case, the new composition scheme can’t be chosen. Registered persons under this scheme shall not be engaged in any supplies that are not subject to GST levy.


#4. Whether Inter-State Supplier can opt for this scheme?

No, Registered persons under this scheme shall not be engaged in Interstate Supplies.


#5. What if I’m a Casual Taxable or Non-Resident Person?

Casual taxable Persons and Non-Resident Taxpayers are not allowed to opt for the new composition scheme.


#6. Whether E-Commerce operators allowed to opt for the new composition scheme?

No, the E-Commerce operators who are required to collect TCS u/s 52 are not allowed to opt for the new composition scheme.


#7. What if multiple GST registration is taken on the same PAN?

In case more than one GST registration is taken on the same PAN, all the registered persons shall pay GST@6%.


#8. How much GST can be collected from the recipient?

Under the new composition scheme, no GST shall be collected from the recipient of goods & services.


#9. How to claim Input Credit under the new composition scheme?

Under the new composition scheme, Input Tax Credit shall not be available to the buyers of input.


#10. When to raise GST invoice?

Under the new composition scheme, no GST invoice is allowed to be raised. Instead, the taxpayer is required to issue the Bill of Supply u/s 31(3)(c) of the CGST Act 2017.


#11. What shall be the format of Bill of Supply?

The taxpayer is required to follow the regular format for issuing Bill of Supply. The only difference is that he is supposed to mention the following note at the top of the Bill of Supply:

“Taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies.”

GST Taxpayer under Normal or Composition scheme can easily create GST Tax Invoice or Bill of Supply on InstaBill Software.


#12. How much GST is to be charged if I deal in alcoholic beverages?

Persons having GST registration under the new composition are required to pay tax @ 6% on all types of supplies of goods or services or both. This is irrespective of whether he is dealing in alcoholic beverages.


#13. How shall GST apply on purchases?

The composition dealers shall pay GST on Reverse Charge basis on all inward supplies/purchases as per section 9(3) & (4) of CGST Act.


#14. How to determine the value of exempt services?

As per the new composition scheme, value of supplies of exempt services shall be ascertained by the way of extending deposits, loans or advances, such that the said consideration is represented by way of interest/discount.

However, this shall not be taken into account in order to compute the aggregate turnover for determining the threshold of ₹50 Lacs and opting this scheme.


#15. What if I deal in sin goods?

Registered persons under this scheme shall not be engaged in the supply of sin goods such as Pan Masala or Tobacco. This also includes Ice-Cream.

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