Five lakh businesses have opted for the GST composition scheme, which allows them to pay taxes at a concessional rate and makes compliance easy.
Composition Scheme- under GST
The composition scheme is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs 75 lakh-Rs 50 lakh in the case of eight north-eastern states and the hilly state of Himachal Pradesh. The objective behind it is to bring simplicity and reduce the compliance cost for small taxpayers.
The scheme is optional under which manufacturers other than those of ice cream, pan masala and tobacco products have to pay a 2% tax on their annual turnover. The tax rate is 5% for restaurant services and 1% for traders.
As per the Central GST Act, businesses are eligible to opt for the composition scheme if a person is not engaged in any inter-state outward supplies of goods and not into making any supply of goods through an electronic commerce operator who is required to collect tax at source.
While a regular taxpayer has to pay taxes on a monthly basis, a composition supplier is required to file only one return and pay taxes on a quarterly basis. Also, a composition taxpayer is not required to keep detailed records that a normal taxpayer is supposed to maintain.