Eligibility of Registered Individual/s:

A registered business opting for the Composition Scheme should not be:

• Engaged in the supply of services other than the service specified in Clause (b) of Para 6 of Schedule. This implies that service providers cannot avail the benefits of the Composition Scheme. One example can be restaurant service
• Manufacturers of ice-cream, pan masala or tobacco are not eligible for the scheme
• Engaged in making any inter-state outward supplies of goods. This implies that the Composition Scheme can only be availed when making intrastate supplies, i.e. within the state supply of goods and services
• Engaged in making any supply of goods through an E-commerce operator who is required to collect tax at source under Section 52
• Should not be a manufacturer of such goods as may be notified by the Government on the recommendations of the Council.

Conditions for availing this scheme:

For an individual to avail this scheme the following conditions must be met. A taxpayer:

• Cannot claim Input Tax Credit (ITC)
• Cannot supply goods which are not taxable under GST, like alcohol
• Has to pay tax at normal rates for transactions under Reverse Charge (RC) mechanism
• Needs to register all segments of businesses under the same PAN collectively or will need to opt out from the scheme
• Has to mention “Composition Taxable Person” on all bills generated and also display the same at his place of business
• A manufacturer/trader can also supply services either to the extent of 10% of the turnover or Rs 500,000, whichever is higher.

Who can opt for the Composition Scheme?

A taxpayer whose turnover is below Rs 1,500,000, can opt for this scheme. In case of North-Eastern states and Himachal Pradesh, the turnover limit is Rs 7,500,000. When calculating turnover, all businesses registered with the same PAN should be considered.