Here are the complete details about the
GST under composition scheme.
It is designed to simplify the compliance burden for small businesses. It offers you the option to pay a fixed percentage of your turnover as tax instead of dealing with regular GST.
Here are some benefits of the Composition Scheme:If your businesses opt for the Composition Scheme, you need to file quarterly returns instead of monthly.
Your businesses will pay tax at a fixed rate on their turnover.
The paperwork and documentation requirements are reduced compared to regular taxpayers.
Since the tax is calculated on a fixed percentage of turnover, it can lead to improved cash flow management for your businesses.
If your
business is under the Composition Scheme, it is subject to a lower tax rate compared to the regular GST rates.
These are some of the
composition scheme benefits.
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Before sharing the benefits of composition scheme, let me tell you the meaning of composition scheme under GST. The GST composition scheme is offered to small businesses. A small company may need to pay a lump sum amount of tax in a financial year. So, to avoid this, a company whose annual turnover is below Rs. 1.5 crore can avail of the composition scheme under GST. In some North-Eastern states and Himachal Pradesh the limit is up to Rs. 75 lakh. But there are a few companies who cannot avail the benefits of composition scheme in GST. Those companies include:
The company that produces ice cream, pan masala, or tobacco.
An individual producing inter-state supplies.
A casual taxable individual or a non-resident taxable individual.
Businesses which offer items through an e-commerce platform.
Well, there are quite a few benefits one can get under the composition scheme. You don't need to deal with hefty paperwork. You need to file your returns only quarterly under GSTR 4 and annually in GSTR 9A. On the other hand, normal taxpayers need to submit three-month GST returns in GST 1, GST 2, and GST 3 and file another annual return in GST 9.
Other benefits include:
- Reduced tax payments:
Tax liability is reduced after introducing this new tax rate structure.
- Lower compliance requirements
Since there is lesser compliance, maintaining records becomes easier.
- Increase liquidity
The operations to sustain a business become more smooth as the tax liability gets reduced. This in turn increases the liquidity of the business which helps to maintain the cash flow over the period of time.
These are the benefits of composition scheme under GST. I hope you find this informative.
Read more:
How to avail
composition schemeunder GST?
Who can opt for
composition scheme?
What is
composition schemein GST?
What is the benefit of composition scheme under GST?
Chandra
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2022-09-13T10:33:29+00:00 2022-09-13T10:33:31+00:00Comment
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