Important Difference between Regular and Composition scheme in GST

2)    GSTR-3b (monthly basis) and

3)    Annual return in Form GSTR-9 or GSTR-9C

2)    Annual return in Form GSTR-9A. 

3) GST CMP-08 – statement for tax paid on quarterly basis.

• Manufacturer of ice cream, pan masala, or tobacco
• A person making inter-state supplies
• A casual taxable person or a non-resident taxable person
• Businesses which supply goods through an e-commerce operator
• Supplier of non-taxable goods
• Business whose turnover exceeds the prescribed limit.

• If a taxable person is registered under this scheme, then no other business under the same PAN take registration as composition scheme.

• No Input Tax Credit can be claimed by a dealer opting for composition scheme
• The dealer cannot supply GST exempted goods
• The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
• If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
• The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
• The taxpayer has to mention the words ‘composition taxable person, not eligible to collect tax on supplies’ on every bill of supply issued by him.
• Composition Dealer can supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher.

Output GST

– Input GST

+Tax on reverse charge

GST on supplies made.

+ Tax on reverse charge

• Unlimited territory of business
• Credit of Input Tax paid is available.
• Sell through E-commerce.

• Lesser compliance (returns, maintaining books of record, issuance of invoices)
• Limited tax liability
• High liquidity as taxes are at a lower rate
• Not required to maintain detailed records.

• Less liquidity as high amount of tax will be stuck in the E- ledgers and he can avail the input only if supplier has filed the return.
• Detail books of account are to be maintained.

• A limited territory of business. The dealer is barred from carrying out inter-state transactions
• No Input Tax Credit available to composition dealers
• The taxpayer will not be eligible to supply exempt goods or  goods through an e-commerce portal.

2) Good for B2B model (selling to resellers)

3) It is suitable for the large scale of business.

Also, GST will increase the prices of the products.

2) Good for B2C business model (selling directly to end customers.)

3) Suitable for not so huge business.