1. Composition Dealer and Composition Scheme

 

An assesse who falls under the Composition Scheme and is required to comply with all the conditions mentioned therewith, is known as a Composition dealer. Such a dealer is required to comply with the rules and regulations framed by the GST Council for Composition Scheme.

 

Any tax payer, whose turnover is less then INR 1.5 Crore, in Rest of India, and less then INR 75 Lakhs in Special Category States (North Eastern States and Himachal Pradesh), can opt for the composition scheme under GST. The point to be noted is that the GST composition scheme limit is based on the turnover of all businesses which are registered with the same PAN, and thus all businesses under the same PAN can either be registered regular dealers or can be composition dealers – not a combination of both.

 

2. GST Composition Scheme Rules

 

A business will need to comply with the following rules, as per the composition scheme under GST:

 

1. No Input Tax Credit can be claimed

 

2. No inter-state supply of goods can be done

 

3. No GST exempted goods can be supplied

 

4. As per the composition scheme rules, tax need to be paid at normal GST rates for transactions under Reverse Charge Mechanism

 

5. If a taxable person has multiple segments of businesses under the same PAN, they must all collectively opt for or opt out of the composition scheme

 

6. The words ‘composition taxable person’ must be displayed prominently on every notice or signboard at the place of business

 

7. As per the composition scheme bill format, the words ‘composition taxable person’ must be displayed prominently on every bill of supply which is issued

 

3. Returns to be Filed by a Composition Dealer

 

A Composition dealer is required to furnish the following returns:

 

1. A quarterly return (GSTR-04), and

 

2. An annual return (GSTR-9A)

 

4. Normal Dealer

 

Assesses who do not fall under any specific category like composition scheme or foreign taxpayer etc. are known as Normal Dealers.

 

1. The taxpayer must file the GSTR-01 form.

 

2. Also, GSTR 2 (Currently Unavailable) and GSTR 3

 

3. Monthly return i.e. GSTR-3B

 

4. Annual Return i.e. GSTR-09

 

5. Difference between a Normal Dealer and a Composition Dealer

 

1. In case of a Normal Dealer, GST Payable is calculated by deducting OUTPUT GST by INPUT GST. However in case of a Composition Dealer, GST Payable is calculated by paying OUTPUT GST at a lower rate (No input is taken into account).

 

2. A Normal Dealer can make interstate sales as well as local sales whereas a Composition Dealer cannot make interstate sales.

 

3. For Normal Dealers, a higher rate of tax is applicable (5%, 12%, 18%). However for a Composition Dealer, lower rates of taxes are applicable.

 

4. A Normal Dealer is required to file GSTR- 1, 2, 3, 3B and an Annual Return. On the other hand, a Composition Dealer is required to file a quarterly return (GSTR-4) and an annual return.

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