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The Composition Scheme is simple scheme for taxpayers under GST. Small taxpayers can avoid complex GST formalities and pay GST at a fixed rate of the turnover. This scheme can be chosen by any taxpayer whose turnover is less than 1.5 crore rupees. CBIC has notified the increase in the threshold limit from 1.0 Crore to 1.5 Crores rupees. In this article, we shall discuss the disadvantages of registering under GST Composition Scheme.
Table of Contents
The following cannot opt for the scheme-
The following conditions should be satisfied to opt for the composition scheme:
There are certain disadvantages of registering under GST Composition scheme, and they are as follows:
It will result in a loss of business as a buyer registered as normal taxpayer will not get any credit when buying from the person registered under the composition scheme. Such buyers may avoid buying from a taxpayer under composition scheme.
Therefore, the burden of the tax is kept on the taxpayer himself, and this should be paid out of his own pocket. Hence, the fundamental principle of limited compliance and tax burden on small taxpayer is defeated here.
The Composition Scheme is simple scheme for taxpayers under GST. Small taxpayers can avoid complex GST formalities and pay GST at a fixed rate of the turnover. However, the disadvantages of registering under GST composition scheme mentioned above can’t be ignored. Hence, it needs to be reviewed at the earliest.
Read our article:Interest on Net GST Liability- Brief Note
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