There are several returns and rules in GST Normal Scheme which are really very annoying thing for small taxpayers. To give relief to the small taxpayers, government announced Composition Scheme for taxpayers whose annual gross turnover is below 1.5 crore.




The good thing is Composite Taxpayers need to file only one return (GSTR-4) per quarter. They need not to take the headache of several returns in a month. But They could not avail ITC (Input Tax Credit) and could not collect tax from customers.

Take a look on the GST rates in Composition Scheme

COMPOSITION SCHEME GST RATES
Type of Business	CGST	SGST	TOTAL
Manufacturers & Traders (Goods)	0.50%	0.50%	1%
Resturants (not serving alcohol)	2.50%	2.50%	5%
Service providers are not eligible for composition scheme

Now, as the composition taxpayer cannot collect GST from the customers, he need to pay GST on his total outward supplies (sales). It means he need to pay tax from his pocket.

So, a big question arises, is the Composition Scheme more Profitable than Normal Scheme or not?

This is a very debatable question. To find out the answer, let's see the following tables,

	NORMAL  SCHEME		V.	COMPOSITION SCHEME
IF SALE VALUE = (1+20%) X PURCHASE VALUE
A.	Purchase Value	1000.00		Purchase Value	1000.00
B.	GST @ 5%	50.00		GST @ 5%	50.00
C.