In the previous lessons, you learnt about the concept of GST return filing and a brief overview about various return forms. You also learnt in detail about GSTR-1 commonly known as outward supply return, and GSTR-3B, commonly known as summary or tax payment return. In this lesson, we will discuss about the filing process and due dates for GSTR-4. Let's understand and discuss what is composition levy and what are the compliances that a taxpayer who's registered under composition levy should undertake. The composition scheme is a facility provided under the GST law to small taxpayers with an annual turnover of less than ₹1.5 crores. Under the said scheme, the government has provided a fixed concessional GST rate, only one return form, that is GSTR-4 needs to be filed annually. This scheme aims to reduce the GST compliance burden on the taxpayer and increase the ease in doing business in India. At the time of GST implementation, that is, in July 2017, the threshold limit to opt for the composition scheme was ₹1 crore, which has now been increased to ₹1.5 crores. In this lesson, you will learn about the process of filing GSTR-4, eligibility criteria to opt for the scheme, and some other points of consideration. What is composition levy under GST? Composition levy is a method of payment of tax for small taxpayers who have a turnover of up to ₹1.5 crores. This limit is 75 lakhs rupees for special category states, namely Arunachal Pradesh, Uttarakhand, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura. The composition scheme is an optional scheme with a primary objective to reduce compliances for small taxpayers and simplify the same. Any taxpayer opting to pay tax under this scheme can pay tax at a prescribed percentage of their turnover on a quarterly basis instead of a monthly basis. Aggregate turnover is required to be computed on the basis of turnover on an all India basis and should include the value of taxable supplies, exports, and exempt supplies made by all persons with the same PAN. The government clarified that for computing the aggregate turnover for eligibility under the scheme, the turnover of exempted services, including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount supplied by a taxpayer will not be included. However, in computing the aggregate turnover, one should exclude inward supplies liable to tax under reverse charge as well as CGST, SGST, UTGST, IGST, and cess. There is a specified rate of tax based on which a taxpayer opting for the composition scheme must discharge their tax liability. Manufacturers opting for the said scheme have to pay tax at the rate of one percent of the turnover, 0.5 percent as CGST, and 0.5 percent as SGST. Restaurants have to pay tax at five percent of the turnover. That is 2.5 percent as CGST and 2.5 percent as SGST. Traders or any other supplier have to pay tax at the rate of one percent of the turnover. That is 0.5 percent as CGST and 0.5 percent as SGST. Suppliers of service or suppliers of goods and services who are not eligible to opt under above provisions, having turnover less than 50 lakhs rupees and on meeting prescribed conditions, can opt for the scheme and pay tax at six percent of the turnover. Like every other facility or mechanism, there are certain restrictions on the eligibility criteria to opt for the scheme. The following persons are not allowed to opt for the composition scheme. Suppliers whose aggregate turnover in the preceding financial year exceeds the threshold limit of 1.5 crores rupees. A casual taxable person or a non-resident taxable person. Person engaged in providing inter-state supply of goods. Person engaged in the supply of non-taxable goods. Person engaged in the supply of goods through an electronic commerce operator. Manufacturer of ice cream or other edible ice, pan masala and tobacco, and other tobacco substitute. With effect from 1st February 2019, a composition dealer can also supply services to an extent of 10 percent of its turnover or five lakhs rupees, whichever is higher. Such person opting to pay tax under the composition scheme is out of the credit chain, that is, they cannot take credit for the tax paid on their procurements. A composition dealer cannot collect tax from the customer and is instead required to pay such tax to the government from their own pocket. If one switches from the composition scheme to a normal scheme, they subsequently become eligible for ITC. A composition taxpayer continues to be liable to pay tax under reverse charge at the applicable rates. A dealer who opts for the composition scheme is required to apply for registration in Form CMP-02. A composition dealer is required to file GSTR-4 on an annual basis by the 30th day of the month, succeeding the end of the financial year to which it pertains. Now, you have a grasp of the fundamentals of composition scheme. In the next video, we shall discuss GSTR-4 that, is the return to be filed by a taxpayer opting for the composition scheme.