Understanding India’s GST Composition Scheme: Eligibility, Opting In, and Compliance Requirements

• The GST composition scheme is a simplified taxation structure for small businesses in India.
• Businesses with an annual turnover of up to ₹1.5 crore can opt for the composition scheme.
• Service providers (except restaurants) have a turnover threshold of ₹50 lakh and a GST rate of 6%.
• Eligible taxpayers can pay GST at subsidised rates of 1%, 5%, or 6% depending on their sector.
• Reduced rates do not apply to transactions covered under the reverse charge mechanism.
• Compliance requirements include quarterly payment of GST and annual filing of Form GSTR-4.
• Composition dealers must label themselves as “composition taxable persons” and cannot issue tax invoices.
• Restrictions include not supplying goods not taxable under GST and not collecting GST from customers.
• Ineligible taxpayers include those with aggregate turnovers exceeding the threshold and manufacturers/traders of certain goods.
• The composition scheme applies at the PAN level based on the primary nature of the business.

Source: a2ztaxcorp.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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