DECODING BUDGET 2023 FOR STARTUPS
Normal Tax Payer VS Composite Dealer under GST
A point by point comparison between Normal Tax Payer and a Composite Dealer under GST that is when an assessee opts for Normal GST Registration VS Composite Scheme.
| Basis | Normal Tax Payer | Composition Dealer |
| Eligibility | GST registration is mandatory for Any business whose turnover in a financial year exceeds Rs 40 lakhs (Rs 10 lakhs for North Eastern states). | A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75* lakh For service provider- having an Annual Turnover in the preceding Financial Year up to 50 Lakh |
| Who cannot opt? | Any person can opt. | Following people cannot opt for the scheme: 1. Non-resident Taxable person 2. Manufacturer of ice cream, pan masala, or tobacco 3. A person making inter-state supplies 4. A casual taxable person or a non-resident taxable person 5. Businesses which supply goods through an e-commerce operator |
| GST Rates | 5%, 12%, 18%, 28% | 1.00 % -For manufacturers and traders 5.00% -Restaurants not serving alcohol 6.00%- For other service providers |
| Return Filing | Monthly returns i.e. GSTR 3B and GSTR 1 Plus Annual return | Quarterly return i.e. GSTR 4 Plus Annual return |
| Merits | 1. Take input tax credit 2. Make interstate sales without restrictions 3. Provide ITC to customers | 1. Simple Quarterly returns 2. Easy compliance 3. Lower rate of tax 4. Quarterly payment of tax |
| Demerits | 1. Multiple return filing 2. More compliances than composition levy 3. More complex | 1. Composition dealer cannot make inter-state sales 2. Cannot take Input Tax Credit on his purchases. 3. No collection of GST in Invoices. He is not allowed to issue tax invoice. 4. ITC is not available for tax paid under reverse charge |
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