Composition Scheme is a feature of Indirect Tax laws that provides an option to go for a put together scheme to provide a comfort to an assessor from complying with the requirement of paying tax on value addition by maintaining detail of ‘inputs’ and ‘outputs’.
As per the scheme, the assesses is made free from the requirement of maintaining complete details of its inputs and outputs and permits the assesses to make payment of a single put-together amount better known as ‘composition fees’. The Indian GST Law provides for the option of availing the benefit of the Composition Levy to small business houses.
Small enterprises with minimal resources will benefit from the decreased compliance requirements. Businesses will have limited obligation in terms of tax payments in place of the composition levy. However, due to the inability of composition dealers to participate in interstate sales transactions and the lack of an input tax credit method to offset GST payments, there is a restricted area of activity.
The registered individual will not be collecting taxes or issuing supply bills. The commodities in his stock on the designated day cannot be acquired from a location outside of his state. Interstate purchases, imported products, agents, or principals located outside the state shall not be included in the items. Every notice and signboard in a visible location shall have the phrase “Composition Taxable Person.”