Eligibility for the Composition Scheme under GST for Intra-State Supplies

The Goods and Services Tax (GST) regime in India aims to simplify tax compliance for small taxpayers through the composition scheme. This scheme offers a simplified tax structure for businesses with a specified turnover limit. In this article, we will explore the eligibility criteria for individuals involved in intra-state supplies and those making inter-state purchases.

Understanding the Composition Scheme

The composition scheme is designed to provide a simplified tax structure for small taxpayers. It reduces the administrative burden and compliance costs by simplifying the tax calculation process. Businesses eligible for the composition scheme must meet certain criteria.

Key Eligibility Criteria

1. Turnover Limit: For the composition scheme, the aggregate turnover must not exceed a specified limit. For most states, this limit is 1.5 crore, while for special category states, it is 75 lakh.

2. Nature of Supply: The taxpayer must be engaged in the supply of goods. Services are generally excluded from the composition scheme, with the exception of specific services such as restaurant services.

3. Intra-State Supply: The composition scheme is primarily applicable to intra-state supplies. Businesses opting for this scheme cannot supply goods outside their state.

Intra-State Supply and Inter-State Purchases

Your scenario involves a person who purchases goods from other states but does not supply goods to other states. Provided that they meet the turnover limit and other conditions, they can still be eligible for the composition scheme. However, it is crucial that their sales are entirely intra-state and that they comply with the rules governing the composition scheme.

For instance, if a person's total turnover is between 20 lakh and 75 lakh, they are required to register themselves for the composition scheme. Unregistered dealers who make purchases from other states but do not sell outside their state must also obtain GST registration under the regular scheme.

Inter-State Supplies and the Composition Scheme

According to Section 103C of the CGST Act, the composition scheme is not available for a person who is making inter-state outward supplies. If you are involved in inter-state inward supplies, you are not restricted from availing the composition scheme, but you must comply with the other provisions related to such supplies.

Seeking Professional Guidance

Given the complexity and potential nuances of GST regulations, it is always advisable to consult the latest rules or seek advice from a tax professional. The GST regime can be subject to change, and specific provisions may vary by state.

For further assistance, you can reach out to GST Edge, a fintech organization providing comprehensive solutions to all your GST-related queries. Whether you have any further questions or need assistance, contact us through Quora or call us at 91 9870245700.