Under the goods and services tax system, there are mainly two types of GST schemes under which one can take GST Registration. These schemes are categorised on the basis of businesses. Businesses are of two types in India: small businesses and well-set-up businesses. Hence, both the GST schemes have been divided into these two types of schemes. The type of business will be determined on the basis of the turnover of the business. Turnover plays a very important role in deciding which scheme will be applicable to which business. The main aim behind the composite scheme is to provide ease of doing business to small business owners. There are many key differences between the Regular GST Scheme and Composite GST Scheme. For better knowledge of the difference between the Regular GST Scheme and Composite GST Scheme, one must read them separately.
Types of Goods and Services Scheme
Under the goods and services tax system, there are two types of goods and services schemes. There are many differences between the Regular GST Scheme and Composite GST Scheme. But before jumping to their differences, one must know about them separately. The two types of goods and services tax schemes are given below:
Regular GST Scheme
This type of goods and services scheme is for those businesses that are well established and have a turnover of up to 20 lakhs or more. Also, it is applicable to those businesses that are having interstate transactions, which means their business is in more than one state. If any business is working through e-commerce websites, then it will also fall under the Regular GST Scheme. In the latter two conditions, turnover of the business does not matter. They have to register under the regular goods and services tax scheme.
Composite GST Scheme
This type of goods and services scheme is applicable to those businesses that are not that developed, or we can say are in the developing stage. All the small businesses with a turnover of up to Rs. 1.5 crores will fall under the Composite GST Scheme. That turnover is even less in the case of special states. There are fewer and easier formalities under this scheme in comparison to Regular GST Scheme formalities. This is one of the key differences between the Regular GST Scheme and Composite GST Scheme.
It will certainly decrease the unnecessary burden of high tax amounts on small business holders. This scheme is a helping hand of the government towards small businesses. Through this scheme, small businesses can take the benefits of GST while paying less tax. This scheme is applicable to both business transactions, either business to business, also known as B to B, or business to consumer that is B to C.
GST Regular Scheme Limit
In both the Regular GST Scheme and Composite GST Scheme, limits have been prescribed over the turnover and associated things. However, the limit under the regular goods and services tax scheme is not as complicated as the composite goods and services tax scheme. There is just one single turnover limit, which is applicable to almost every type of business in all the states. Below is the table for a better understanding of the limit under the regular goods and services tax scheme:
| Types of Business | Turnover |
| Intrastate Transaction | Upto 20 Lakhs or more than that |
| Interstate Transaction | No limit on transactions applicable on all |
| E-commerce Businesses | No limit on transactions applicable on all |
GST Composition Scheme Limit
Under the GST Composition Scheme limit varies from business to business. Bifurcation under the Composition GST Scheme is made on the basis of two types of states. Under these two types, one is special states, and another is normal states. Special states include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand. Except for these states, all other states will come under the normal state category. Given below is the table which can make the limit under the above-mentioned scheme clear as per the different businesses and states:
| Types of Business | Turnover of Goods | Turnover of Services | |
| Normal States | Special Status | ||
| Manufacturer | 1.5 Crores | 75 Lakhs | Can provide services up to 10% of turnover or 5 Lakhs or whichever is high. |
| Trader | 1.5 Crores | 75 Lakhs | |
| Restaurant Services | 1.5 Crores | 75 Lakhs | – |
| Other Service Providers | – | – | 50 Lakhs |
What are the key differences between the Regular GST Scheme and Composite GST Scheme?
There are many differences between the regular GST scheme and composite GST scheme. Some of the main differences between regular goods and services tax schemes and composite goods and services tax schemes are given below in tabular form so that it becomes easy to understand. Refer to the below table to know the main and key difference between the regular goods and services tax scheme and the composite goods and services tax scheme:
| Particulars | Regular GST Scheme | Composite GST Scheme |
| Types of Businesses | The well-set-up businesses whose turnover is up to 20 lack | On the small businesses |
| Transactions | Can do both interstate as well as intrastate transaction | Only intrastate transactions are allowed. Under this scheme, one cannot do the interstate transactions |
| Turnover | There are just two types of turnover limits prescribed under this scheme of GST: 20 lakhs and 40 Lakhs | There are three types of turnover limits prescribed under this type of GST scheme: Rs. 1.5 Crores, Rs. 75 Lakhs or Rs. 50 Lakhs |
| Export Business | Can do export | Cannot do export |
| SEZ Business | Can do transactions in the special economic zone | Cannot do transactions in the special economic zone |
| Tax Slabs | Tax rates under this scheme can be 0%, 5%, 12%, 18%, 28% | Tax rates under this scheme can be 0%, 1%, 2%, 5%, 6% |
| ITC | Can claim the input tax credit under the regular scheme | Under the composite scheme, it is not allowed to claim the input tax credit |
| Invoice | Tax invoice needs to be issued under this scheme | Tax invoices need not be issued under this scheme |
| BOS | A Bill of Supply need not be issued under this scheme | A Bill of Supply or BOS needs to be issued under this scheme |
| GST Collection | GST collected from the customers of the business | GST cannot be collected from the customers; it must be paid from the pocket |
| Exceptions | Businesses involved in interstate transactions and e-commerce businesses fall under this scheme, and for such kinds of businesses, turnover is irrelevant | Businesses involved in interstate transactions and e-commerce businesses can never fall under this scheme called the composite GST scheme |
| Formalities | There are more formalities in such kind of scheme | Formalities are very few in number under the composite scheme |
| Applicability | Indian States | Indian states with bifurcation between regular states and special states |
| Return Filing | A lot of formalities are involved while filing GST returns under this scheme. | Less formalities are involved while filing GST returns under this scheme. |
Conclusion
The goods and Services Tax system in India offers two main schemes: the Regular GST Scheme and Composite GST Scheme, each tailored to specific types of businesses. The Regular GST Scheme is designed for well-established businesses with a turnover of 20 lakhs or more, including those engaged in interstate transactions and e-commerce. In contrast, the Composite GST Scheme is intended for small businesses with less turnover, which can be up to Rs. 1.5 crores which is lower in special states, primarily limiting them to intrastate transactions.The two schemes differ in various aspects, including their applicability, tax rates, input tax credit eligibility, invoicing requirements, GST collection, and formalities. While the Regular GST Scheme is more comprehensive but entails greater formalities, the Composite GST Scheme offers simplicity and reduced tax burdens for small businesses, particularly in intrastate trade. Importantly, the Regular GST Scheme and Composite GST Scheme cater to different business profiles and play a crucial role in the GST framework, ensuring compliance and tax efficiency for businesses across India.
