Important Difference between Regular and Composition scheme in GST
With the introduction of Goods and Service Tax, businesses are required to do new business compliances. However to lower the burden of compliance for small businesses, a composition scheme in GST has been introduced. Every person who crosses the threshold limit of turnover are required to take registration under GST. People get confused between regular and composition scheme under GST.
Many feels the problem for selection. The difference between the Regular scheme and Composition scheme is been summarized in the table as follows :
Difference between the Regular scheme and Composition scheme
|Meaning||Normal procedural scheme of payment of output tax and considering the eligible input tax credit.||Composition Scheme is a simple and easy scheme for small taxpayers who can get rid of tedious GST formalities and pay GST at a fixed rate of turnover.|
|Returns||1) GSTR-1 (Monthly or quarterly as the case may be) ,
2) GSTR-3b (monthly basis) and
3) Annual return in Form GSTR-9 or GSTR-9C
|1) GSTR-4 on an annual basis (decided in 32nd GST Council Meeting)
2) Annual return in Form GSTR-9A.
3) GST CMP-08 – statement for tax paid on quarterly basis.
|Supply||Both Intrastate and interstate||Only Intra-state|
|Tax Collection||Yes, at the prescribed rates of particular goods and services.||No, not allowed to collect composition tax.|
|Condition to opt||Any person can opt Regular scheme at any time.||A taxpayer whose turnover is below Rs 1.5 crore or Rs 75 lakh (In case of North-Eastern states and Himachal Pradesh ) can opt for Composition Scheme in the beginning of the Financial year.|
|Supply services||The limit is 20 Lakhs and the tax rates are as per the particulars of the services.||The limit is 50 Lakhs and the tax rate will be @6% of the turnover.|
|Who Cannot opt the Scheme||No exceptions||
|Specified Condition of Scheme
|What to Issue||Tax Invoice||Bill of Supply|
|GST payment||The GST is payable as follows :
– Input GST
+Tax on reverse charge
|GST Payment has to be made out of pocket for the supplies made as follows :
GST on supplies made.
+ Tax on reverse charge
|Demerits|| More compliance (number of returns to be filled.)·
|Good for||1) Your customer can claim Input Tax Credit (ITC) if eligible, so big buyer will not avoid buying from you.
2) Good for B2B model (selling to resellers)
3) It is suitable for the large scale of business.
|1) Beneficial for small suppliers, intra-state local suppliers and restaurant sector as It prevents them from various procedural compliance and gives a hassle free working environment.
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.
Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.
GST Rates for Regular Scheme-
GST Rates for Composition Scheme-
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