Window to opt in for GST Composition Scheme open till March 31

Startups that aim to benefit from the GST Composition Scheme and have a maximum turnover limit of up to Rs 1.50 crore, have until March 31st, 2023, to register themselves. Registering under composition scheme to boost ease of doing business environment across the country for the startups and small businesses.

Registering under the Composition Scheme not only improves ease of doing business for the startups but will also bring liquidity for the businesses.

What is Composition Scheme?

Composition Scheme is a simple and easy scheme under Goods & Services Tax (GST) for taxpayers where the small taxpayers like SMEs or startups can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. 

Currently, the Central Board of Indirect Taxes and Customs (CBIC) has opened the window for the taxpayers to avail the benefits. Getting GST Registration under Compliance Scheme is optional. 

Who can Register under GST Composition Scheme?

The Startups that deal in goods or services having a turnover below Rs 1.5 Crore can get GST registration under Composition Scheme.

Special category states can apply for GST composition scheme only if turnover is less than Rs 75 lakhs. The special category states include -Arunachal Pradesh, Sikkim, Nagaland, Meghalaya, Mizoram and more.

In a notification, CBIC has explained the simplified process to register for the scheme. After Login on to the GST portal (www.gst.gov.in) the taxpayers can register themselves and opt for Composition Levy. The GST CMP-02 form has to be filled and submitted.

What are the rates under GST composition scheme?

The GST rates have been classified into six different categories ranging from 0% to 28%, depending upon the nature of goods and services. The rate of interest under GST Composition Scheme are very low, i.e. 1% & 5%.

When will the tax be paid?

Taxpayer opting for composition levy will have to pay tax on a quarterly basis before 18th of the month succeeding the quarter during which the supplies were made.

Can composition taxpayers supply goods outside his State?

No. The business who are registered under the composition scheme cannot sell goods Inter-State or to SEZ. In order to do inter-state business, the startup would need to register as a regular taxpayer.

What are the benefits of Composition Scheme?

One of the major benefits of GST Composition scheme is that small businesses/startups registered under this scheme can focus on their business rather than spending time and resources in maintaining the tax books. Also, the businesses have to file only quarterly rather thrice in a month. The Ventures registered under this scheme have to pay lower taxes than others. So, it involves less working capital and thus it bring more liquidity for the businesses.