There are large number of sellers, who are registered as 'composite dealer' and are not able to launch on the Amazon.in marketplace since the GST law mandatorily requires a seller to be registered as a 'regular dealer' to sell through an e-commerce marketplace. A seller, who is registered as a composite dealer can convert his registration to a regular dealer by following the steps as elaborated in this document. There are certain benefits and additional compliances of getting registered as a regular dealer instead of a composite dealer which can be considered by such sellers which are also detailed in this document.
You can avail the following benefits, if you are registered as a regular dealer:
As a regular dealer can claim Input Tax Credit (ITC) of the GST paid on purchase and set-off against output liability, whereas as a composite dealer cannot avail ITC of the GST paid on purchase. However, the availment of credits are subject to specified restrictions as provided under the GST Law.
You can sell goods to customers, who are located in other states i.e. they can to make interstate sales whereas a seller registered as composite dealer cannot make interstate sales. This will significantly increase the market size and in turn, a chance to get more sales.
You will be able to launch on the e-commerce marketplace and can supply to customers buying on the e-commerce marketplace, which in turn will increase the market reach and a chance to get more sales turnover.
When a composite dealer sells to a buyer registered as regular dealer, since no taxes are collected, the tax portion built into the sale price becomes a cost for the buyer. However, when the regular dealer sells, the buyer who is registered under the regular scheme is eligible to claim credit of the GST paid on such purchases. This will open an avenue to supply to business customers increasing chances to get more sales.
You can recover the GST and discharge the same, whereas the GST is a cost to the seller, if you are registered as a composite dealer. A composite dealer cannot charge or collect GST on the Bill of Supply.
As a regular dealer, you need to face the following consequences:
As a regular dealer, you will have to file three returns every month and one annual return, whereas a composite dealer needs to file four quarterly returns and one annual return. There is a proposal to simplify this process wherein even regular dealers are required to file only one return per month or quarter (depending on the turnover).
A composite dealer issues a bill of supply whereas the regular dealer will have to issue tax invoice for each supply containing various details as required under the GST law.
Under the GST law, a regular dealer with notified annual taxable turnover need to mention HSN codes on the tax invoice. Further, unlike a composite dealer, who is required to pay a fixed rate of tax on the entire turnover, a regular dealer is required to pay tax at the rates applicable to the items sold.
While both composite and regular dealers are required to maintain records, a regular dealer is also required to maintain the following records as well:
As per the GST laws, an e-commerce operator is liable to collect 1% of the consideration paid to suppliers for supplies made through the e-commerce marketplace. Therefore, consideration received for supplies through the e-commerce marketplace will be after deducting the requisite 1% of value of supply.
As per the GST laws, a person who intends to voluntarily withdraw from the Composition scheme will be required to file an application in Form GST CMP-04. Application can be filed at any point during the year, before the date of withdrawal from the scheme.
Follow the steps below to file electronic application in Form GST CMP-04 as on the portal:
Further, a person opting out of the composition scheme will be required to furnish a statement in FORM GST ITC-01 electronically, on the GST portal, containing details of the stock of inputs along with those contained in semi-finished or finished goods and capital goods as on date of withdrawal.