Understanding Regular Dealer and Composition Scheme in Tally Prime

What Is Regular Dealer And Composition

In India, businesses are required to register under the Goods and Services Tax (GST) regime to comply with tax regulations. There are two types of registration available under GST: regular dealer and composition scheme. In this article, we will discuss these two types of registration and how they can be managed in Tally Prime, a popular accounting software.

Regular Dealer
A regular dealer is a business that is registered under GST and is required to maintain detailed records of its transactions. Regular dealers are required to file monthly or quarterly returns and pay taxes on the output supplies. They can claim input tax credit on the taxes paid on their purchases and use it to offset their tax liability.

In Tally Prime, regular dealers can create a GST-compliant invoice and record their transactions in a structured manner. The software automatically calculates the GST liability based on the applicable tax rates and provides various reports for tracking and reconciling the taxes paid and received.

Composition Scheme
The composition scheme is a simplified tax scheme available for small businesses with a turnover of up to Rs. 1.5 crores. Under this scheme, businesses are required to pay a fixed percentage of their turnover as tax and are not allowed to claim input tax credit on their purchases. Composition dealers are required to file quarterly returns and are subject to lower compliance requirements than regular dealers.

In Tally Prime, businesses registered under the composition scheme can create a composition invoice and record their transactions accordingly. The software automatically calculates the tax liability based on the applicable tax rate and provides various reports for tracking and reconciling the taxes paid.

Key Differences between Regular Dealer and Composition Scheme
The main differences between regular dealers and composition dealers are:

1. Tax rate: Regular dealers are required to pay tax on the output supplies based on the applicable tax rate, while composition dealers are required to pay a fixed percentage of their turnover as tax.
2. Input tax credit: Regular dealers are allowed to claim input tax credit on their purchases and use it to offset their tax liability, while composition dealers are not allowed to claim input tax credit.
3. Compliance requirements: Regular dealers are required to file monthly or quarterly returns and maintain detailed records of their transactions, while composition dealers are required to file quarterly returns and are subject to lower compliance requirements.

Conclusion
Choosing the right type of registration under GST is an important decision for businesses in India. Regular dealers and composition dealers have different tax liabilities, compliance requirements, and benefits. Tally Prime provides a comprehensive solution for managing both regular dealer and composition transactions, ensuring accurate and timely compliance with GST regulations. By understanding the differences between regular dealer and composition scheme, businesses can choose the right registration type and manage their transactions effectively in Tally Prime.