Composition Scheme in Revised GST Model Law Eligibility & Conditions for Composition Scheme in GST Law Rate of Tax in Composition Scheme Restrictions to opt Composition Scheme Return Form & Due dates in Composition Scheme Late fees

1. Statutory Provisions relating to Composition Levy are stated inStatutory Provisions relating to Composition Levy are stated in
Chapter III, Section 9 of Revised Model GST Law
with four Sub-Sections (1), (2), (3) & (4)

2. Composition scheme is an option
Available on permission from Proper Officer
The taxable person should make an application exercising
his option to pay tax under this scheme.
Once granted, the eligibility would be valid unless his
permission is cancelled /stands withdrawn, or the person
becomes ineligible for the scheme.becomes ineligible for the scheme.
Eligibility:
Person should be Registered Taxable Person
whose ‘aggregate turnover’ ( in all States) does not exceed `
50 lakhs in the preceding financial year will be eligible to
opt for payment of tax

3. Meaning of Aggregate Turnover
As per Sec 2(6) of revised GST Model Law
“aggregate turnover” means the aggregate value of
all taxable supplies,
exempt supplies,
exports of goods and/or services and
inter-State suppliesinter-State supplies
of a person having the same PAN,
to be computed on all India basis and
excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST
Act, as the case may be;

4. To understand the meaning of Aggregate Turnover in respect of
Composition Scheme we need to understand the following definitions.
Sec 2(99)
“Taxable supply’’ means a supply of goods and/or services which is
chargeable to tax under this Act;
Sec 2(44)
“exempt supply” means supply of any goods and/or services which are“exempt supply” means supply of any goods and/or services which are
not taxable under this Act and includes such supply of goods and/or
services which attract nil rate of tax or which may be exempt from tax
under section 11 ;

5. Please Note-
Aggregate turnover does not include the value of inward supplies on
which tax is payable by a person on reverse charge basis under sub-
section (3) of Section 8 and the value of inward supplies.
Language of Sec 9(1) clearly states “……subject to sub-section 3 of
section 8……….”
Sec 8(3) relates to levy under RCM on which Composition Scheme is
not available.not available.

6. Rate of tax:
The rate of tax would be as notified by the Government after
recommendations of the Council.
However, the law provides that such rate cannot be less than
in case of manufacturers In case of Traders
Min 2.5% CGST+2.5% SGST Min 1% CGST+1% SGST
Please Note:
Composition scheme is
Available only in case of “Supply of Goods”
Not available in case of “ Supply of Services”

7. Conditions for opting to pay tax under composition scheme:
i) `Restricted from making supply of goods which are not liable to
GST:
Certain goods are not liable to GST, e.g. petroleum, alcohol for
human consumption, etc. – a person opting for composition scheme
shall not be entitled to make any supply of non- GST goods.
(ii) No Inter-State outward supplies:
Even stock transfers to branches outside the State would not be
permitted. However, insofar as it relates to inter-State
inward procurements / receipts, there is no restriction.inward procurements / receipts, there is no restriction.
(iii) Restricted from making supplies through an e-commerce
operator: unless such portal is owned by the same person.
(iv) Restriction on manufacture of notified goods:
However, there is no restriction in case the person is engaged in
trading of such goods.
(v) Would be applicable for all transactions under the same PAN

8. Conditions……..Continued
To clarify further, if a taxable person has multiple business verticals and if he
has opted for separate registrations for each such vertical, composition
scheme would become applicable for all the business verticals and it cannot
be applied for select verticals only.
Eg: If a taxable person has the following businesses separately registered:
— Sale of garments (Registered in Delhi)— Sale of garments (Registered in Delhi)
— Sale of mobiles (Registered in Delhi)
— Franchisee of LG Products (Registered in Haryana)
In the above scenario, the composition scheme would be applicable for all
the 3 units, provided sum of “Aggregate Turnover” from all the 3 units does
not exceed Rs 50 Lakhs.
Taxable person will not be eligible to opt for composition scheme say for sale
of garments and sale of mobiles and opt to pay taxes under the regular
scheme for franchisee of LG Products.

9. Other Conditions……..Continued
(vi) Shall not collect tax
(vii) Not entitled to avail input tax credit
(viii) Shall not issue Tax Invoice but issue “Bill of Supply”
9 (2) The permission granted to a registered taxable person under sub-
section (1) shall stand withdrawn from the day on which his
aggregate turnover during a financial year exceeds fifty lakh
rupees.
9 (3) A taxable person to whom the provisions of sub-section (1) apply
shall not collect any tax from the recipient on supplies made by him
nor shall he be entitled to any credit of input tax.
9 (4) If the proper officer has reasons to believe that a taxable person
was not eligible to pay tax under sub-section (1), such person shall,
in addition to any tax that may be payable by him under other
provisions of this Act, be liable to a penalty and the provisions of
section 66 or 67, as the case may be, shall apply mutatis mutandis
for determination of tax and penalty.

10. Return Forms for a Composite Tax Payer
Return
Type
Frequency Due date Details to be furnished
Form
GSTR-4A
Quarterly - Auto-populated details of inward supplies
made available to the recipient registered
under composition scheme on the basis
of FORM GSTR-1 furnished by the supplier.
Form Quarterly 18th of All outward supplies of goods and servicesForm
GSTR-4
Quarterly 18 of
succeeding
month
All outward supplies of goods and services
including auto-populated details from Form
GSTR-4A and tax payable details. Details of
any additions, modifications, or deletions
in Form GSTR-4A should also be submitted
in Form GSTR-4.
Form
GSTR-9A
Annual 31st Decemb
er of next
fiscal
Consolidated details of quarterly returns filed
along with tax payment details.

11. In the current composition scheme, a composite dealer has to declare
only the aggregate turnover of sales. He is not required to declare
invoice wise details.
In GST, the composite tax payer will file his returns with the invoice wise
details of inward supplies which are auto-populated based on Form
GSTR-1 filed by his supplier along with the aggregate turnover of
outward supplies.
Late Fees on delayed filing of Returns
Form 4A Quarterly Return for
Inward Supplies
` 100 per day of delay
Maximum = ` 5,000
Form 4 Quarterly Return for
Outward Supplies
` 100 per day of delay
Maximum = ` 5,000
Form 9A Annual Return ` 100 per day of delay
Maximum = 0.25% on Turnover in the state*

12. CA Mukesh Sharma
Email: ca.mukeshsharma@yahoo.com