GST Composition to Regular Scheme
GST stands for Goods and Services Tax, which is a value-added tax levied on most goods and services sold for domestic consumption in India. The GST system in India provides for two types of tax schemes: the Composition Scheme and the Regular Scheme.
The Composition Scheme is designed for small taxpayers with an annual turnover of up to Rs. 1.5 crores (as of March 2021), and it allows them to pay a fixed percentage of their turnover as tax instead of following the regular GST rules. This scheme simplifies the tax process and reduces compliance costs for small businesses.
On the other hand, the Regular Scheme is applicable to businesses with an annual turnover exceeding Rs. 1.5 crores. Under this scheme, businesses have to follow the regular GST rules, including registering for GST, filing regular GST returns, and paying GST on their taxable supplies as per the applicable GST rates.
If a business registered under the Composition Scheme exceeds the turnover limit of Rs. 1.5 crores, they will have to transition to the Regular Scheme and follow the regular GST rules, including filing regular GST returns and paying tax as per the applicable GST rates. This transition is mandatory, and failure to comply can result in penalties and legal consequences.