GST Return Filing – Composition Scheme
The Composition Scheme under the Goods and Services Tax (GST) in India is designed to simplify compliance for small businesses. Businesses opting for the Composition Scheme are subject to lower tax rates but come with certain restrictions and conditions. Here’s an overview of the GST return filing process for businesses registered under the Composition Scheme:
Eligibility :
Businesses with an aggregate turnover of up to Rs. 1.5 crore (increased to Rs. 1.8 crore for FY 2019-20 onwards) in the previous financial year can opt for the Composition Scheme.
Opting for the Composition Scheme:
Eligible businesses need to opt for the Composition Scheme at the beginning of the financial year by filing Form GST CMP-02.
Quarterly GST Returns:
Businesses under the Composition Scheme need to file quarterly returns instead of the regular monthly returns. The return is filed using Form GST CMP-08.
Due Dates for Quarterly Filing:
The due dates for filing quarterly returns are as follows:
- April to June (Q1): By 31st July
- July to September (Q2): By 31st October
- October to December (Q3): By 31st January
- January to March (Q4): By 30th April
Details in Quarterly Returns (GST CMP-08):
The quarterly return (GST CMP-08) includes details of the outward supplies, inward supplies attracting reverse charge, and tax payable.
Annual Return:
Businesses under the Composition Scheme also need to file an annual return in Form GSTR-4, providing a summary of quarterly returns.
Payment of Tax:
Taxpayers under the Composition Scheme pay a fixed percentage of their turnover as tax. This percentage varies based on the type of business (manufacturers, traders, or restaurants).
Issuing Bill of Supply:
Instead of a tax invoice, businesses under the Composition Scheme issue a Bill of Supply for their supplies.
Restrictions under Composition Scheme:
- Businesses opting for the Composition Scheme cannot avail Input Tax Credit (ITC) on their purchases.
- They cannot make inter-state supplies.
- They cannot supply exempt goods/services.
Voluntary Withdrawal:
Businesses can voluntarily withdraw from the Composition Scheme by filing Form GST CMP-04.
Businesses are advised to refer to the latest notifications and guidelines issued by the GST authorities or consult with a tax professional like Legato Business Solution llp for the most current and accurate information.