Penal Provisions Related to Composition Scheme

Under GST, if in the opinion of proper officer, it is found that a taxable person not being eligible for the scheme has opted for the scheme, they shall be liable to pay differential taxes along with penalty and provisions of demand and recovery will apply to him.

This means that before opting for the scheme a taxable person must be free from any or all doubts of his eligibility for the scheme to avoid such penal provisions. However, if a small taxpayer who has limited knowledge of tax laws and compliances makes any mistake under composition scheme, he shall be liable to pay tax at standard rate on his total turnover along with a penalty which will be equal to the total tax liability.