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Tally Solutions | Nov-21-2019
Who is a Composite Dealer in GST?
- The very word ‘composition’ comes from the Latin componere, meaning "put together"
- It is a feature to provide comfort to the assessee by discounting them from the requirement of paying tax on value addition by maintaining detail of 'inputs' and 'outputs', and
- To go for a put-together scheme by paying taxes on at a prescribed percentage of his turnover every quarter, instead of paying tax at a normal rate
Features that a Composition Scheme Provides to a Composition Dealer in GST
- Simplicity
- Reduced compliance cost for small businesses opting for composition scheme
- The scheme is an optional one (i.e., at the option of the assessee but after complying the provisions prevalent under the scheme)
- Option to pay taxes at a prescribed percentage of turnover for every quarter, instead of paying tax at a normal rate
Limitations for Composite Dealer in GST
| Limitation No.1 | Threshold limit :
|
| Limitation No.2 | The composite dealer in GST is not permitted to collect tax from the recipient of supplies |
| Limitation No.3 | The Composition dealer under GST cannot also avail the credit of input tax paid by him on his inward supplies |
GST Rate for a Composite Dealer
The CGST ACT Provides for an upper limit for composition rate for different categories of a registered person.
| Manufacturer | 1% (both CGST and SGST) of the turnover in State or turnover in Union territory. |
| Restaurants not serving alcohol | Service provided by Restaurants :
|
| Other suppliers | 1% of the turnover taxable supplies of goods in State or turnover in Union territory Note: It is to note that the aggregate turnover shall not be leviable to composition rate and the only turnover of taxable supplies shall be leviable to composition levy. |
Eligibility Criteria: Composition Dealer under GST
- He is not engaged in the supply of service other than restaurant services stated above
- Is not engaged in making any supply of goods which are not leviable to tax under GST Laws
- Is not engaged in making any inter-state outward supplies of goods
- He should not be engaged in making any supply of goods through an electronic commerce operator
- He should not be a manufacturer of such goods as may be notified by the Government on the recommendations of the Council (Ice cream and other edible ice products/Pan Masala/Tobacco and Substitutes)
GST Return for Composition Dealer
A composite dealers GST Return comprises mainly of two returns and they are:
| Return | Type | Due Date |
| FORM GSTR-4 | Quarterly Return | 18th of the month following the end of the quarter instead of any statement of outward or inward supplies |
| FORM GSTR-9A | Annual Return | Still, this return is not made available on the GST Network/Portal |
GST Invoice Format for Composition Scheme
The composite dealer in GST shall not issue a tax invoice and shall only issue a BILL OF SUPPLY containing various details as given below:
| a) | Name, address and GSTIN of the supplier |
| b) | a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters |
| c) | date of its issue |
| d) | name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient |
| e) | Harmonised System of Nomenclature Code for goods or services |
| f) | description of goods or services or both |
| g) | value of supply of goods or services or both after considering discount or abatement, if any; and |
| h) | a signature or digital signature of the supplier or his authorised representative |
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