The GST Composition Scheme is a simplified tax-paying mechanism offered to small taxpayers under the Goods and Services Tax (GST) regime. It allows small taxpayers to get rid of tedious GST formalities and pay GST at a fixed rate of turnover. The scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore, and the threshold limit has been increased from Rs. 1.0 crore to Rs. 1.5 crore. The limit of turnover is Rs. 50 lakhs for taxpayers in certain states.

Some key features of the GST Composition Scheme are:

• Rate of tax: The rate of tax under the composition scheme is lower than the normal GST rate. For goods manufacturers and traders, it is 1% GST, divided as 0.5% CGST and 0.5% SGST.

• Reverse charge mechanism: A composition dealer has to pay tax under the reverse charge mechanism wherever applicable. The rate applicable to the supplies is the rate at which GST has to be paid.

• Input tax credit: No input tax credit is available for tax paid under reverse charge for a composition dealer. Also, a composition dealer is not allowed to avail input tax credit of GST on purchases.

• Invoicing: A composition dealer cannot issue a tax invoice under GST. He can issue a bill of supply in lieu of a tax invoice.

• Withdrawal: The option to pay tax under the composition scheme lapses from the day on which the aggregate turnover during the financial year exceeds the specified limit. The taxpayer is required to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed.

To opt for the GST Composition Scheme, a taxpayer has to file GST CMP-02 with the government. This can be done online by logging into the GST Portal. A composition dealer is not required to maintain detailed records as required by a normal taxpayer. However, he is required to furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the composition scheme, electronically, in FORM GST-ITC3.

In conclusion, the GST Composition Scheme is a beneficial scheme for small taxpayers who want to get rid of tedious GST formalities and pay GST at a fixed rate of turnover. It offers lower tax rates, reduced paperwork and compliance, and lower tax liability. However, there are some limitations to the scheme, such as the inability to avail input tax credit and the requirement to file an intimation for withdrawal from the scheme if the threshold limit is crossed.