GST Composition Scheme Reopens untill 30th Sep, Should you Opt?

In the 21st GST Council meeting held at Hyderabad on 09th September 2017. Keeping in view the concerns raised by various GST Council members, window for opting composition scheme for registered dealers has been reopened untill 30th September 2017.

Issues with Composition Scheme Option

There were several issues faced by registered users and users whose registration applications got stuck due to some technical issues or informational incompleteness. Dealers such as kirana stores and others dealing in variety of products through a retail counter were left out in such process. Small dealers were unable to maintain item wise stock details and manage Tax invoices on sales. A big relief has come for such users as they can now take a breather and opt for composition w.e.f. 01st October 2017.

Are you eligible for Composition Scheme of Tax?

If you are not a supplier of services or exempt goods, If you do not trade your goods interstate, If you are not an e-commerce operator or a manufacturer of notified goods and your turnover is less than Rs. 75 lakhs then you can opt for composition scheme. Composition rates are as follows:

	CGST	SGST/UTGST	Total
Manufacturers	1%	1%	2%
Restaurants (F&B)	2.5%	2.5%	5%
Traders	0.5%	0.5%	1%

 

Should you opt for Composition Scheme?

Below is a simple formula which will help you to assess whether you should opt for the composition scheme or not:

(Sale Price – Purchase Price) * GST Rate > Sales Price * Composition Rate

If above condition satisfies then you must opt for composition scheme. Another benefit is that a regular dealer has to submit 3 returns a month and a composition dealer is required to submit a quarterly return only.

If you are at the end of the goods supply chain as a retailer selling your products to consumers and the formula gives positive result then the scheme is good for you. This window is not expected to reopen again as GST council has now given enough time to opt for the scheme for Financial year 2017-18. Next window to opt for composition scheme will open for F.Y. 2018-19.