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Accounting Of GST Composition Scheme Dealer

PART A-Composition Scheme

What is the composition scheme
Who is eligible to avail composition scheme
Category of persons excluded from the Scheme
Composition rates and computation of tax
Procedure to be followed
Part B- Accounts and records

Accounts and records to be maintained
Period for which to be retained
Composition levy is an option for specified categories of small taxpayers to pay GST at a very low rate on the basis of turnover
Advantages

√ Low rate of tax

√ Hassel free simple procedures for such taxpayers

√ Simple calculation of tax based on turnover

√ A very simple quarterly return

The composition scheme is for

√ Manufacturers (other than few notified goods)

√ Traders of goods

√ Restaurants

having aggregate turnover of Rs 1.5 Core in the previous financial year subject to certain conditions and restrictions

The aggregate turnover limit is Rs 75 lakh for following 9 states

Assam Meghalaya Manipur Arunachal Pradesh Mizoron
Tripura Nagaland Sikkim Himachal Pradesh

Two special category states, Uttrakhand and J & K have opted for keeping the turnover limit as Rs 75 lakh

Composition Scheme

Aggregate turnover for determination of eligibility:
Total all India turnover of all units under same PAN.
It includes the value of exempt supplies and exports.
It does not include the GST paid and the value of supplies received by a person on which he pays tax on reverse charge basis.
Composition Scheme if availed shall include all registered persons having same PAN
Composition scheme availability to a person shall lapse with effect from the date of his reaching the threshold turnover of seventy five lakh rupees.

Part B: Accounts and Records

Register person is required to maintain records and accounts of
Production or manufacture of goods Supplies (inward/outward supply, supplier and recipient details, invoice, credit/debit note, delivery challan)
Stock ( receipt, used, lost, balance and location where goods are stored including in transit etc)
Input tax credit and use of inputs/input service
Output tax payable
Advance payments received and adjusted
Accounts and Records

Composition person to maintain simpler records
Warehouse/godown operator/transporter (even if not registered), to maintain record of consignor, consignee, movement, delivery, storage
Agent to maintain records receipt and supply on behalf principal and records of authorization by the principal
A C&F agent or a carrier having custody of goods on behalf of a registered person shall maintain details of goods handled by him.
Accounts and Records-requirements

It is sufficient (but not necessary) to maintain accounts and records in electronic form
Records can also be maintained manually – Such records are to be kept and be accessible at related place of business.
Required to retained for six years from the due date of annual return
Commissioner may for a class of taxable persons
notify maintenance of additional documents
prescribes alternative documents, if such class is not able to maintain records as per the provisions of the Act.
Separate records for works contract ( receipt /supply /payments etc.)
Production of records on demand
Every taxable person having turnover exceeding prescribed limit shall get his account audited by a chartered accountant or cost accountant (Prescribed limit at present is two crore rupees)
He shall submit the copy of audited annual account and a reconciliation statement.
Maintaining electronic records:

√ Are to be authenticated by digital signature

√ Maintained and preserved in the manner that these can be restored within reasonable period in any circumstances

√ On demand to provide details, password, and explanation of codes used.
Article Credit: Taxguru.in

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