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The Hidden Limitations of Composition Scheme Most Businesses Ignore

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The Composition Scheme under GST looks simple and attractive — lower tax rates, quarterly payments, and minimal compliance. But here’s the truth: Lower rate does not always mean lower tax burden. Before opting under Section 10 of the CGST Act, every business must understand what they are giving up. What Most Businesses Overlook 1.No Input Tax Credit (ITC) Composition dealers cannot claim ITC on purchases and cannot pass ITC to customers. If your inputs carry substantial GST, your real tax cost may increase despite lower rates. 2.Cannot Collect GST Separately You cannot issue a tax invoice. You must issue a Bill of Supply. GST cannot be charged separately from customers. This means tax is paid out of your own turnover — directly impacting margins. 3.No Inter-State Supply Allowed Under current GST provisions, composition taxpayers cannot make inter-state outward supplies. If your business plans expansion beyond your state, the scheme may restrict growth. 4.Tu...
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Composition Scheme under GST – A Smart Tax Solution for Small Businesses in India

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Composition Scheme under GST – A Smart Tax Solution for Small Businesses in India Running a small business is challenging enough — complex tax compliance should not add to the burden. The Composition Scheme under GST is a simplified taxation option designed specifically for small taxpayers who want lower tax rates, minimal compliance, and peace of mind. If you are a trader, manufacturer, restaurant owner, or small service provider, this scheme could significantly reduce your compliance load and improve cash flow. Let’s understand how it works and whether it is right for your business. What is the Composition Scheme? The Composition Scheme is a special mechanism under GST that allows eligible taxpayers to pay tax at a fixed, lower rate on turnover , instead of paying GST at normal slab rates and claiming Input Tax Credit (ITC). It is governed by Section 10 of the CGST Act and related GST rules. The main objective? ✔ Simplify compliance ✔ Reduce paperwork ✔ Lower ta...
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Export Without Paying IGST – Improve Your Cash Flow Legally

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  Letter of Undertaking (LUT) under GST Export Without Paying IGST – Improve Your Cash Flow Legally If you are an exporter of goods or services, paying IGST first and then waiting for a refund can block your working capital. The Letter of Undertaking (LUT) allows you to export without paying IGST , helping you preserve liquidity and operate smoothly. At our firm, we help businesses file, manage, and monitor LUT compliance professionally — so you can focus on growth while we handle the law. What is LUT Under GST? A Letter of Undertaking (LUT) is a declaration filed on the GST portal that allows a registered exporter to: Export goods without payment of IGST Export services without payment of IGST Supply to SEZ units/developers without payment of IGST It is governed by Section 16 of the IGST Act and Rule 96A of the CGST Rules. In simple terms: No upfront tax payment. No refund delays. No working capital blockage. Why LUT is Critical for Exp...
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Reverse Charge GST Guide – Protect Your Business from Costly Errors

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  The Reverse Charge Mechanism (RCM) is one of the most sensitive compliance areas under the Central Goods and Services Tax Act, 2017. Many GST notices and tax demands arise due to incorrect handling of reverse charge transactions. This article explains RCM in a practical, business-focused manner so that companies, professionals, and entrepreneurs can ensure proper compliance. What is Reverse Charge under GST? Under normal GST provisions: The supplier collects GST from the customer and deposits it with the government. Under Reverse Charge: The recipient of goods or services is liable to pay GST directly to the government. In simple terms, the tax responsibility shifts from the supplier to the buyer. Legal Provisions Governing RCM Reverse charge is covered under: Section 9(3) – Notified goods and services Section 9(4) – Purchases from unregistered suppliers (restricted applicability) Section 9(5) – E-commerce operator liable to pay...
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Don’t Panic! What to Do Immediately After Receiving a GST Notice

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  What Should You Do If You Receive a GST Notice? Receiving a notice under the Goods and Services Tax Act can be stressful for any business owner. However, a GST notice does not automatically mean penalty or wrongdoing. In most cases, it is issued for clarification, mismatch, or verification purposes. The key is to act promptly, respond professionally, and ensure proper documentation. This guide explains what you should do if you receive a GST notice and how to protect your business from unnecessary penalties. Step 1: Read the Notice Carefully Do not panic. Carefully review: The section under which the notice is issued The financial year involved The reason for the notice The deadline to respond Whether a personal hearing is required Understanding the nature of the notice is the first step toward preparing an accurate reply. Step 2: Identify the Reason for the Notice Common reasons include: Mismatch between GSTR-1 and GSTR-3B ITC mismatch with GSTR-...
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Documents required for company incorporation in India

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Director related Documents 1. PAN card of all Directors 2. Aadhaar of all directors   3. Address proof of Directors : Either “BANK STATEMENT” OR “POST PAID MOBILE BILL” OR “ELECTRICITY BILL” OR “WATER BILL” (NO OTHER DOCUMENT WILL BE CONSIDERED AS ADDRESS PROOF).   4. Provide the details of how long the person has been living at the above address. 5. Passport-size photos of all directors. 6. Email addresses and mobile numbers of all directors. 7. Current Occupation and engagement of all directors. 8. Educational details of all directors 9. Place of birth of all directors   Company -Related Details 1. Two proposed names of the company (must be UNIQUE) 2. Detail of business activity for drafting   of MOA & AOA   Registered office related Documents of the company If the business is run on a rented property, then;                a. Rent Agreement  ...
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Common Reasons for GST Notices in India

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  Receiving a notice under the Goods and Services Tax (GST) law can be unsettling for any business. However, in most cases, GST notices are system-generated due to data mismatches, non-compliance, or reporting errors. With increasing digitization and data analytics by the GST department, even minor inconsistencies can trigger scrutiny. Understanding the common reasons for GST notices helps businesses remain compliant and avoid unnecessary penalties, interest, and litigation. Below is a professional overview of the most frequent reasons why businesses receive GST notices in India. 1. Mismatch Between GSTR-1 and GSTR-3B One of the most common triggers is a mismatch between: Outward supplies declared in GSTR-1 Tax liability discharged in GSTR-3B If turnover or tax declared in GSTR-1 exceeds what is reported and paid in GSTR-3B, the system may generate a notice for short payment of tax. Best Practice: Conduct monthly reconciliation before filing returns. 2. Diff...
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