Small taxpayers including start ups and many Small and Medium Enterprises may find it difficult to have resources and expertise to meet the increased tax compliances under GST regime. Thus, a taxpayer with an aggregate turnover in a financial year up to Rs. One crore may register under composition scheme. (75 lakhs in case of seven special category states).A deal erregistered under compositions cheme is not required to maintain detailed records as in the case of a normal taxpayer and shall pay tax as a percentageofh is turnover during the year with out the benefit of ITC(Input Tax Credit). Such a dealer cannot issue a tax invoice as well. A buyer from composition dealer will not be able to claim input tax on such goods. A Composition dealer shall not collect any tax from his customers. Tax payers making inter- state supplies or paying tax on reverse charge basis shall not be eligible for composition scheme.
The rates for this scheme are as follows:
| Category of registered person |
Rate of CGST |
Rate of SGST |
total |
| Manufacturer (other than manufacturers of notified goods) |
1% |
1% |
2% |
| Supplier of food and drinks for human consumption (except alcohol) |
2.5% |
2.5% |
5% |
| Other supplies like traders |
0.5% |
0.5% |
1% |
| Service Providers (other than restaurants) |
Not eligible for composition scheme |
