Return to site

Composition Scheme in GST - Benefits & the Process to Apply for it

Around 28.75% of GST assesses did not file for returns in 2018, while 16% required to register such returns monthly failed to comply with the updated rules.

Owing to complex nature and relatively lengthy paperwork, many businesses tend to miss out on such filings. To simplify the process, companies can opt for GST composition scheme in which only one form has to be submitted annually.

 

How to opt for composition scheme to pay GST?

You can file returns for your business through composition scheme, provided your company satisfies the following criteria –

  • GST composition scheme rules are that only firms dealing in the supply of goods can avail such facilities. No service providers can avail such benefits. 
  • Companies dealing in supply of goods within the same state are eligible for such benefits.
  • All businesses verticals should have the same PAN number to apply for composition scheme to file GST. 
Filing for returns under the GST composition scheme allows businesses to enjoy the following benefits – 
  • Reduced hassles – 

Usually, companies are required to register for three monthly GST returns (GST-1, GST-2, GST-3), and one annual return (GST-9), if yearly turnover is higher than Rs.1.5 crore. Composition scheme has provisions for businesses to file only two returns annually - GST-4 and GST-9.

Owing to complex nature and relatively lengthy paperwork, many businesses tend to miss out on such filings. To simplify the process, companies can opt for GST composition scheme in which only one form has to be submitted annually.

Thus, complications of paperwork are significantly reduced through such composition scheme.

  • Lower tax liability – 

With fixed rates of GST imposed on a yearly basis, the total tax liability is significantly reduced. Such benefits allow companies to enjoy higher profits, which can be reinvested to fund expansion projects.

Also, the lower burden will enable companies to enjoy greater liquid fund availability, which, in turn, increases the overall cash flow and turnover.

The composition scheme under GST benefits small businesses by increasing their profitability, allowing them to undertake all development and expansion projects.

Companies can additionally avail business loans for higher financing requirements, extended by numerous financial institutions in the country.

Also read, this important post on GST: How can you Cancel GST Registration on GST Login Portal?

All Posts
×

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!

OKSubscriptions powered by Strikingly