Composition SCheme
Composition Scheme Rules under GST provide for all the procedural
compliance w.r.t. intimation for Composition Scheme, the effective date for
levy, conditions, and restrictions on the levy, validity of levy and rate of tax.
Latest Updates
5th July 2022
(a) The due date of GSTR-4 for FY 2021-22 is further extended by a late
fee waiver up to 28th July 2022 vide Notification 12/2022 dated 5th July
2022.
(b) The due date of CMP-08 for April-June 2022 is extended up to 31st July
2022 vide Notification 12/2022 dated 5th July 2022.
26th May 2022
As per the CGST Notification no.7/2022 dated 26th May 2022, the late fee
has been waived for the delay in filing GSTR-4 for FY 2021-22, if it is filed
between 1st May and 30th June 2022.
24th February 2022
Composition taxable persons and those interested to opt into the scheme
for FY 2022-23 must submit a declaration on the GST portal in Form CMP-
02 by 31st March 2022.
28th May 2021
As per the outcome of the 43rd GST Council meeting and CBIC
notification,
(1) Interest relief has been provided for filing of CMP-08 for Jan-March
2021 quarter as per which, for any delay, interest is not charged until 3rd
Composition SCheme
May, whereas 9% of reduced interest will be charged if filing is done
thereafter until 17th June, and 18% later on.
(2) The due date to file GSTR-4 for FY 2020-21 is extended up to 31st July
2021.
(3) The maximum late fee for GSTR-4 that can be charged will be restricted
to Rs.500 per return for nil filing and Rs. 2000 for other than nil filing.
1st May 2021
(1) The due date to file GSTR-4 for FY 2020-21 was extended from 30th
April 2021 to 31st May 2021.
(2) Form CMP-08 that was due by 18th April 2021 for January-March 2021
has been given a relaxation in the interest charges. No interest for filing on
or before 8th May, interest reduced to 9% between 9th May and 23rd May,
but charged at 18% thereafter.
(3) The time limit to file ITC-03 by newly opted composition taxable persons
for FY 2021-22 is extended up to 31st May 2021.
Intimation and Effective date for
Composition Levy
For persons already registered under pre-GST
regime
Any person being granted registration on a provisional basis (registered
under VAT Act, Service Tax, Central Excise laws etc) and who opts for
Composition Levy shall electronically file an intimation in FORM GST CMP-
01, duly signed, before or within 30 days of the appointed date.
Composition SCheme
If intimation is filed after the appointed day, the registered person:
Will not collect taxes
Issue bill of supply for supplies FORM GST CMP- 03* must also
be filed within 60 days of the exercise of option:
Details of stock
Inward supply of goods received from unregistered
persons held by him on the date preceding the day of
exercise of option
For persons who applied for fresh register
under GST to opt scheme
For fresh registration under the scheme, intimation in FORM GST REG-
01 must be filed.
Registered under GST and person switches to
Composition Scheme
Every registered person under GST and opts to pay taxes under
Composition Scheme, must follow the following:
Intimation in FORM GST CMP- 02 for exercise option**
Statement in FORM GST ITC- 3 for details of ITC relating to
inputs lying in stock, inputs contained in semi-finished or
finished goods within 60 days of commencement of the relevant
financial year
Composition SCheme
Effective date for composition levy
The option to pay tax under Composition Scheme shall be
effective:
For persons already registered under pre-GST
regime: Appointed Day
Registered under GST and person switches to
Composition Scheme: Filing of Intimation
For persons who applied for fresh register under GST to opt
scheme Option to pay tax under Composition Scheme shall be
effective from:
where the application for registration has been
submitted within thirty days from the day he becomes
liable for registration, such date.
In the above case, the effective date of registration
shall be the date of grant of registration.
Conditions and Restrictions for
Composition Levy
The person opting for the scheme must neither be a casual
taxable person nor a non-resident taxable person.
The goods held by him in stock on the appointed date must not
be purchased from a place outside his state. The goods should
therefore not be classified as:
Composition SCheme
Interstate purchase
Imported Goods
Branch situated outside the State
Agents or Principal situated outside the State
Where the taxpayers deal with unregistered person, tax must be
paid or no stock must be held
Composition SCheme
Mandatory display of invoices of the words ” composition
taxable person, not eligible to collect tax on supplies”
Mandatory display of the words “Composition Taxable Person”
on every notice and signboard displayed at a prominent place.
He is not a manufacturer of such goods as may be notified by
the Government during the preceding financial year.
Validity of Composition Levy
It depends on the fulfilment of conditions (discussed above), however, an
eligible person for scheme may also opt out of the scheme by filing an
application. In case Proper Officer has reasons to believe that taxpayer is
not eligible for the scheme or contravened any Rules or ACT, he may issue
show cause notice followed by an order denying the entailment of the
scheme.
Composition SCheme
Rate of Tax
The rate of tax prescribed for different categories of registered persons
have been described below:
Composition Scheme Rules under
GST- Compliance
Composition Scheme Rules under GST provides for submission of different
forms meant for respective purposes followed by due date for submission
of such forms, which are as follows:
Form
Purpose Due Date
Required
Composition SCheme
Form GST To opt into the scheme by provisional GST Prior to appointed date or
CMP-01 registration holder(from VAT regime) within 30 days of the said dat
Form GST Intimation of willingness to opt into the Prior to commencement of
CMP-02 scheme for GST registered normal taxpayers Financial Year
Form GST Details of stock and inward supplies from Within 90 days of the exercis
CMP-03 registered and unregistered persons of the option
Form GST Within 7 days of the occurren
Intimation of withdrawal from the scheme
CMP-04 of the event
Form GST Show cause notice on contravention of Rules
On any contravention
CMP-05 or Act by a proper officer
Form GST
Reply to show cause notice Within 15 days
CMP-06
Form GST
Issue of Order Within 30 days
CMP-07
Form GST
Registration under Composition scheme Prior to the appointed date
REG-01
Form GST Details of inputs in stocks, semi-finished and 30 days of withdrawing optio
Composition SCheme
ITC-01 finished goods
Within 60 days of
Form GST
Intimation of ITC available commencement of the financ
ITC-03
year
All the above-mentioned forms must be duly signed and filed electronically
on Common Portal, either directly or through a Facilitation Centre notified
by the Commissioner.
Conclusion
Any person who opts for the scheme will be deemed to have been opted
for all the places of business having the same registered PAN. Hence, you
may not choose any one of all the place of business to be registered under
the scheme. Composition Scheme Rules under GST have been targeted to
be strict and crisp for the persons availing the Composition Scheme.
To know more about Composition Scheme, its benefits, and drawbacks,
and Transition Provisions for your business, do read through our other
articles.
Below is the downloadable format (PDF) prescribed by the government for
registering as a composition dealer.
Intimation to pay tax under Section 10
