Dis advantages on Composition Scheme
The following dis- advantages for under the composition scheme
- It is applicable for registered persons having same Permanent Account Number have to opt for composition Scheme. If one registered person opts for normal scheme, others become ineligible for composition scheme.
- The benefit of of composition scheme can be availed of by a registered person under section 10(1) shall be lapse with effect from the day on which his aggregate turnover during financial year exceeds the limit of Rs 1.5 Cr/75 lakh.
- A taxable person to whom the provisions of composition scheme applies shall not collect any tax from the receipts on supplies made by him. It means that a composition scheme supplier cannot issue a tax invoice.
- A taxable person to whom the provision of composition scheme applies shall not be entitled to any credit of input tax.
- It is important to note that for any tax payable under Reverse Charge Mechanism, the option of payment under this scheme will not be available. Rate of tax payable on supplies taxable under reverse charge mechanism will be regular rates and not the composition rate.
- Customer who buys goods from registered person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice.
Ineligible Persons under Composition Scheme
The following person are not eligible to opt for composition scheme
- Supplier of goods or services which are not taxable under the CGST Act/SGST Act/ IGST Act.
- An inter-state supplier of goods or services
- Person supplying goods or services through an electronic commerce operator who is required to collect tax source under Section 52
- Manufacturer of certain notified goods
- Casual taxable persons
- Non-resident taxable persons
- Supplier of services other than those mentioned in provision of this act.
