Hello and welcome. In this post, we will discuss the rates and limit for the Composition scheme in detail.

We have discussed the following topics:

What is a Composition Scheme?

The Composition scheme is applicable for small businesses who cannot maintain detailed books of accounts and have a small annual turnover. Such businesses can opt for an easy tax (GST) compliance under this scheme.

Who can opt for Composition Scheme?

Any business with an annual turnover less than Rs 1.5 crore can opt for this scheme. The annual turnover for consideration of composition scheme is the turnover of all the businesses under the same PAN.

Only certain business i.e. Manufacturers of goods, Dealers, and Restaurants (not serving alcohol) can opt for this scheme.

Below listed are the businesses who cannot opt for the Composition scheme:

  • Service Providers
  • Business doing interstate sales
  • Business paying TDS under GST

The tax rate applicable to a Composition Dealer

The chart given below provides the details of the tax rate applicable under the composition scheme:

Tax rate applicable under composition scheme
Type of Business CGST SGST Total
Manufacturer and Traders (Goods) 0.5% 0.5% 1%
Restaurants not serving alcohol 2.5% 2.5% 5%
Other service providers 3% 3% 6%

 Returns applicable for a Composition Dealer

The composition dealer has to furnish only one return i.e., GSTR-4. GSTR-4 filing has to be done quarterly. However, filing of a Form GSTR-9A  has to be done once a year.

Auto-drafted details are not available for the composition dealer for the quarters July to September and October to December. Hence, the dealers have to enter the sales details manually.

We have come to an end of this post on the rate and limit for composition scheme in GST.