GST Composition Scheme Tax Rates – Latest 2024: The tax rates listed here are applicable for businesses registered under the Composition Scheme of Goods and Services Tax (GST) in India.
The given tabular representation shows different types of business categories covered under the composition scheme i.e., manufacturers/traders/service providers etc., restaurants except those who serve liquor; Also, it includes special category items like bricks/tiles/construction material manufacturing units etc., Each column represents CGST & SGST Rates along with Total Tax Rate applicable if one opts this scheme.
Composition Scheme Tax Rates under GST
Below is the table covering the tax rates for different types of businesses under the GST composition scheme in India:
| Type of Business | CGST Rate | SGST Rate | Total Tax Rate |
|---|---|---|---|
| Manufacturers and Traders (Goods) | 0.5% | 0.5% | 1% |
| Restaurants not serving Alcohol | 2.5% | 2.5% | 5% |
| Service Providers | 3% | 3% | 6% |
| Manufacturers of bricks (including building materials) | 3% | 3% | 6% |
Please note that these rates are applicable for businesses opting for the composition scheme and are subject to change based on updates from the GST authorities. It’s crucial to verify the current rates from the official GST portal or consult with a tax professional.
GST Composition Scheme Turnover Limit: A Comprehensive Guide
Break Down of Tax Rates under GST Composition Scheme
Let’s break down the tax rates for different types of businesses under the composition scheme of the Goods and Services Tax (GST) in India:
- Manufacturers and Traders (Goods):
- CGST Rate: 0.5%
- SGST Rate: 0.5%
- Total Tax Rate: 1%
This category includes businesses involved in manufacturing goods or trading them. They pay a total tax rate of 1% (0.5% CGST + 0.5% SGST) on their turnover if they opt for the composition scheme. This rate is significantly lower than the standard GST rates for these sectors.
- Restaurants not serving Alcohol:
- CGST Rate: 2.5%
- SGST Rate: 2.5%
- Total Tax Rate: 5%
Restaurants that do not serve alcohol and choose the composition scheme pay a total tax rate of 5% (2.5% CGST + 2.5% SGST) on their turnover. This lower rate is designed to support small eateries and reduce their tax burden.
- Service Providers:
- CGST Rate: 3%
- SGST Rate: 3%
- Total Tax Rate: 6%
Service providers opting for the composition scheme pay a total tax rate of 6% (3% CGST + 3% SGST) on their turnover. This includes businesses offering various services such as consulting, IT services, healthcare, etc. The rate is comparatively lower than the standard GST rates for services.
- Manufacturers of Bricks and Building Materials:
- CGST Rate: 3%
- SGST Rate: 3%
- Total Tax Rate: 6%
Manufacturers of bricks and building materials, including certain specified products, pay a total tax rate of 6% (3% CGST + 3% SGST) on their turnover under the composition scheme. This rate is lower than the standard GST rates applicable to manufacturing sectors.
Overall, the composition scheme offers lower tax rates and simplified compliance for small businesses with turnovers up to a certain limit (₹1.5 crore as per the last update). However, businesses opting for this scheme cannot avail input tax credit and must adhere to specific eligibility criteria and compliance requirements.
Advantages of Composition Dealership in GST: Simplified Taxation and Reduced Burden
Composition dealers pay less tax than regular taxpayers do under the GST system because of several factors.
Simpler Compliance: Compliance for composition dealers is simple as they need not maintain detailed invoices or keep records for input tax credit accounting, thus lowering administration workload and compliance cost.
Fixed Tax Rate: As we have already mentioned composition tax rates before, these taxes are levied based on a turnover which attracts a fixed rate. The normal GST rates applicable to regular taxpayers are generally higher than this standard rate. This system provides uniformity and predictability in computing taxes for small businesses.
No Input Tax Credit (ITC): Regular taxpayers can claim a refund of taxes paid on inputs by way of ITC against their output liability but such a provision is not available to those who are enrolled with a composition scheme. This implies that although they do not get back money spent on purchases as refunds it also helps make their calculations easier while reducing paperwork involved in claiming such refunds too.
Limited Liability: Generally, composition dealers are small businesses having an annual turnover below ₹1.5 crore (as per latest update) and these entities are subjected to limited liability provisions provided by law thereby easing their burden towards meeting indirect tax obligations imposed upon them.
Focus on Business Operations: Small enterprises can concentrate more on their core activities and strategies for growth if they adopt this program instead of engaging themselves into cumbersome procedures related with taxation at different levels.
It should be remembered that while this plan brings about simplified compliance requirements and lower tax regime; there may be some businesses where it won’t work well depending upon factors such as volume turnover achieved, nature/type/industry classification adopted, availability or otherwise of input credits claimed etc., before deciding whether one should go in for composition scheme