🔍 How do I know if I am eligible for the Composition Scheme?

• Aggregate Turnover Limit: A registered taxpayer with aggregate turnover up to ₹1.5 crore in the preceding financial year (₹75 lakh for special category states) may be eligible.
• Eligible Businesses:
  • Manufacturers (except those producing notified goods like ice cream, pan masala, or tobacco products).
  • Suppliers of Food and Drinks for human consumption (excluding alcohol for human consumption).
  • Service Providers and Mixed Suppliers (providing both goods and services) are also eligible under the Composition Scheme, subject to specific conditions, with a turnover limit up to ₹50 lakh.
• Ineligible Businesses:
  • Businesses supplying services (other than specified exempt services).
  • Interstate suppliers of goods.
  • Non-resident taxable persons, casual taxable persons, and e-commerce operators who collect tax at source.

📝 What returns do I need to file under the Composition Scheme? and what are the tax rates ?
Under the Composition Scheme, a dealer has simplified compliance requirements with reduced filing obligations and tax rates:

Returns to File:

1. GSTR-4 (Quarterly): This is the main return filed quarterly by composition dealers, due on the 18th of the month following the quarter.
2. CMP-08 (Quarterly Payment Form): This form is used to pay tax on a quarterly basis, due by the 18th of the month following the quarter.
3. GSTR-9A (Annual): An annual return summarizing yearly transactions, due by 31st December of the following financial year. Note: Filing of GSTR-9A has been suspended for certain years but may apply in others.

Applicable Tax Rates:

• Manufacturers: 1% (0.5% CGST + 0.5% SGST)
• Traders (Goods Suppliers): 1% (0.5% CGST + 0.5% SGST)
• Restaurants (Serving Food/Drinks): 5% (2.5% CGST + 2.5% SGST)
• Service Providers (Eligible small services): 6% (3% CGST + 3% SGST) for service providers with turnover up to ₹50 lakh under the composition scheme for services.

This scheme provides reduced tax rates and easier compliance, but composition dealers cannot claim input tax credit (ITC) on their purchases.

💼 My client is a manufacturer of food products and also supplies them in his restaurant. What is the GST payable under the Composition Scheme?

• Manufactured Packaged Food Products: If the client is supplying packaged food products, this is considered manufacturing. Under the Composition Scheme, a 1% GST rate (0.5% CGST + 0.5% SGST) applies to manufacturers.
• Restaurant Services (Supplying Bhajiya): For supplies made in the restaurant, such as serving bhajiya, the applicable GST rate under the Composition Scheme is 5% (2.5% CGST + 2.5% SGST).