While Goods and Services Tax was meant to give a new look to Indian taxation, huge complexity of the law remained unintelligible to small and medium traders. The Composition Scheme is brought in by the GST Council, which offers ease of compliance under GST to businesses covered under it. In the present piece of writing, let us acquaint ourselves with the rate of GST Composition Scheme applicable for services, benefits, and eligibility criteria.
The Composition Scheme is a voluntary VAT scheme under which businesses are required to pay a fixed percentage of turnover as GST and not at the transaction level. This has been brought in to reduce the compliance burden and boost economic growth.
GST Composition Scheme Rate for Services
The composition scheme rate in case of services has been approved to be 6% of turnover. It has been capped at a maximum limit of ₹50 lakhs. This rate shall be relevant on supplies by persons supplying services or mixed supplies of goods and services having turnover up to the specified limits.
Eligibility Criteria
- Aggregate Turnover: Not more than ₹50 lakhs ()₹75 lakhs for special category states)
- Services or Mixed Supplies: Making supplies other than supplies specified in paragraph 2 of this notification
- No Interstate Supplies: Not making any supply of goods or services which are in the nature of inter-State supplies
- No E-commerce Supplies: Not making supplies through an electronic operator
- No Ineligible Supplies: Not providing ineligible services like banking, insurance, or telecommunication
Benefits under Composition Scheme
- Easy Compliance: Less paperwork and compliance burden
- Lesser Tax Burden: Invoice-based 6% fixed tax rate of turnover
- No ITC: No maintaining records for ITC
- Quarterly Returns: Filing returns on a quarterly basis instead of monthly
- No Audits: Exemption from GST audits
Conclusion
The small and medium service providers will surely get a very simple and hassle-free compliance system under the Composition Scheme. Hence, knowledge of the rate and eligibility for availing the Composition Scheme benefit shall be very important for growth and expansion in business. Use the services from a Chartered Accountant to know whether your business is falling under the eligibility criteria of Composition Scheme and complies with the GST Registration.
Moreover, If you want any other guidance relating to GST Registration please feel free to talk to our business advisors at 8881-069-069.
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