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Prerequisite for Using GST in TallyPrime as a Composite Dealer

The GST era started in India on 1st July, 2017, and Tally* has walked every mile of that journey with you and your business. And this page is here to help you prepare for that journey. For example, if you are a Composite Dealer wondering how to get started with GST Composition tax rate, or if you are not sure how to classify your goods or services and apply the tax rates, then we have got all the answers for you.

GST Composition Scheme

Composition scheme under GST is a relief mechanism for small taxpayers as it offers comparatively lesser compliance activity, as well as a flat GST tax rate. A taxpayer whose turnover is less than INR 1.5 Crore can opt for the composition scheme under GST. Similarly, to register as a Composite Dealer in the Special Category States that includes North Eastern States and Himachal Pradesh, the turnover can be less than INR 75 Lakhs. As a Composite dealer, you can make payments and file taxes quarterly, instead of monthly. The tax rate varies from 1% to 5% on the total turnover and you cannot claim Input Tax Credit. There are several other eligibility criteria to opt for GST Composition Scheme, to learn more, refer to our blog.

Composition Scheme Rules

Composition scheme under GST is different from the regular GST scheme and has its own set of rules and intimation for dealers. For instance, taxpayers supplying Exempt supplies, suppliers of services other than restaurant-related services, manufacturers of ice cream, pan masala, or tobacco, businesses that supply goods through an e-commerce operator, and so on, cannot opt for the Composition scheme under GST. Also, no Input Tax Credit can be claimed and no Inter-state supply of goods can be done by a Composite Dealer, to learn more refer to our blog.

Who is a Composite Dealer under GST

Under the GST Composition scheme, the department has certain limitations and restrictions for a Composite Dealer. There are tax collection limitations, a specified GST rate and GST Returns period, and a GST invoice format that has to be followed and maintained by the dealer under the GST Composition scheme. As a Composite Dealer, one cannot interstate outward supplies of goods, cannot avail the credit of input tax paid on inward supplies, shall not issue a tax invoice, and shall only issue a BILL OF SUPPLY, and so on. To learn more about Composite Dealer under GST, refer to our blog.

GST Composition Scheme for Services

If your business has a turnover of less than INR 1.5 Cr in the case of goods then can register yourself as a Composite Dealer. Similarly, to register as a Composite Dealer in the case of a services business, the required turnover is less than INR 50 Lakhs. However, under the GST composition scheme for services, only the supplier of restaurant-related services can be registered as a Composit Dealer. Service provided by restaurants by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption of any drink (other than alcoholic liquor for human consumption) is leviable at the rate of 5% percent (2.5% of CGST and 2.5% for SGST) under Composition scheme. To learn more about GST Composition Scheme for Services, refer to our blog.

Understand GST Rates for Composition Scheme

Since the GST Composition scheme is for small taxpayers, the GST rates defined under this scheme differ from the regular GST scheme. For a Composite dealer, the tax rate varies from 1% to 5% on the total turnover and you can make payments and file taxes quarterly, instead of monthly. Under the GST composition scheme, the applicable tax rate for manufacturers other than manufacturers of such goods as may be notified by the Government is 1% of the taxable turnover. In the case of restaurants not supplying alcoholic liquor is 5% of the taxable turnover, and for other eligible suppliers is 1% of the turnover of taxable supplies of goods. To learn more about GST Rates for Composition Scheme, refer to our blog.

How to Switch to Composition Scheme

GST composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross the set limit of INR 1.5 Crores and INR 75 Lakhs in special category states. If you are a regular GST dealer, you can easily switch to the GST composition scheme by filing intimation forms with the government.  This intimation must be given at the beginning of every Financial Year by a dealer wanting to opt for the Composition Scheme. Also, there are certain criteria to meet in terms of the stock held, available ITC, and so on for the transition from regular to composition. To learn more about Switch to Composition Scheme. refer to our blog.

Click the links below for detailed information on how to work as a Composite Dealer in TallyPrime:

Set Up TallyPrime for GST Composition

Purchases Under Composition GST

Sales Under Composition GST

GST CMP-08 Report

GSTR-4 Report

File GSTR-9A

GSTR-4 Annual Returns

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