Composition scheme under the law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law. Composition levy would be generally opted by persons who are supplying goods & services or both to the end consumer.
A. How to opt-in Composition Scheme:
- The application for opting-in composition scheme for the financial year, 2020-21 has been made available on GST Portal.
- The taxpayers who are already in composition scheme in previous financial year are not required to opt in for composition again for FY 2020-2021.
- The eligible registered taxpayers, who want to opt-in for composition scheme for the Financial Year 2020-2021, may file FORM GST CMP-02 application up to 31st March, 2020 on common portal.
- The taxpayers should navigate as follows:
- Log-in>Services > Registration > Application to opt for Composition Levy>filing form GST CMP-02>file application under DSC/EVC.
- Once CMP-02 application is filed, the composition scheme shall be available to the taxpayer w.e.f. 1st April 2020.
- The taxpayers who were a regular taxpayers in previous financial year but are opting-in composition scheme for 2020-21 should file ITC-03 for reversal of ITC credit on stocks of Inputs, semi-finished goods and finished goods available with him within a period as prescribed under Rule, 3(3A) of CGST Rules, 2017.
- For more information taxpayers may consult user-manual available at GST Portal. Following links may also be used for opening user manual: https://tutorial.gst.gov.in/userguide/compositionpoc/index.htm
B. Return /Payment
All taxpayers opting in for composition shall file FORM GST CMP-08 quarterly and pay GST and shall file GSTR-4 annually.
C. Who are eligible taxpayers for opting-in for Composition Scheme:-
Following taxpayers may opt for this scheme:
- The normal taxpayers having aggregate turnover (at PAN level) below Rs. 1.5 Crore in the previous financial year, who doesn’t want to avail ITC facility,
- The normal taxpayers having aggregate turnover (at PAN level) below Rs. 75 lakh in the previous financial year who are situated in following states:
- Arunachal Pradesh,
- Tripura and
- The normal taxpayers supplying services and/or mixed supplies having aggregate turnover of last financial year below Rs. 50 lakhs.
D. Taxpayers, who are not eligible for opting in composition scheme:
- Suppliers of the goods/services who are not liable to be taxed under GST,
- Inter-State outward suppliers of goods/services,
- The taxpayers supplying through e-commerce operators, who are required to collect tax under section 52,
- The manufacturers of notified goods like (i) Ice cream and other edible ice, whether or not containing cocoa, (ii) All goods, i.e. Tobacco and manufactured tobacco substitutes and (iii) Pan Masala, (iv) Aerated water
- A Casual taxpayer,
- A Non-Resident Foreign Taxpayer,
- A person registered as Input Service Distributor (ISD),
- A person registered as TDS Deductor /Tax Collector,
Source: GST Portal