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CONVERSION TO COMPOSITION SCHEME PROCESS

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CONVERSION TO COMPOSITION SCHEME PROCESS




Introduction



Composition scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover.

Every tax administration aims towards timely recovery of taxes, filing of returns, simplified generation and maintenance of records, invoices and others documents. Such elements are often a challenge for small businesses.

To overcome this shortcoming a composition scheme was introduced under the respective State VAT Laws with conditions applied on eligibility for the scheme accordingly. The GST Law also contains an option for a registered taxable person having turnover less than the limit to pay tax at a lower rate respect to certain specified conditions.


overview


Eligibility



Any manufacturer or trader having a turnover of less than Rs. 1.5 crore in a preceding financial year for states and union territories not covered below can opt for the composition scheme.

In case of following states aggregate turnover (for goods and restaurant service) limit shall be Rs.75 lakh

  • Arunachal Pradesh
  • Manipur
  • Meghalaya
  • Mizoram
  • Nagaland
  • Uttarakhand

ELIGIBILITY
Composition Scheme - Applicable GST Rate
Type of Business CGST SGST TOTAL
Manufacture and Traders(Goods) 0.5% 0.5% 1%
Restaurants not serving alcohol 2.5% 2.5% 5%

Opting in Procedure for already registered taxpayer:

  • Log in to the Taxpayer's Interface
  • Go to Services > Registration > Application to Opt for Composition levy
  • Fill the form

Conversion from regular to composition scheme by Existing Taxpayers in GST:
Any taxpayer who is registered as normal taxpayer under GST needs to file an application to opt for Composition Levy in Form GST-CMP-02 at GST Portal.

Conversion from regular to composition scheme by New Taxpayers in GST:
Any person who becomes liable to register under GST Act, need to file his option to pay composition amount in the Application in Form GST REG-01.

Stock Intimation:
Taxpayer is also required to file a Stock Intimation to furnish the details of stock held on the day immediately preceding the date from which Composition Levy is sought. Stock Intimation is to be filed within 30days of the date from which Composition Levy is sought.

The application to opt for Composition Levy is not subject to approval by the tax authorities. On filing of the application, you are marked as a composition taxpayer in the system and consequential changes are made in the system. However, in case it is found that you were not eligible for the Composition Levy or have not filed Stock Intimation, you would be compulsorily pushed out of the Composition Levy by initiating appropriate proceedings.


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Returns



Composition taxpayer needs to pay tax and furnish a statement, every quarter or part thereof, as the case may be, in FORM GST CMP-08.
And further he has to furnish a return for every financial year or part thereof, as the case may be, in FORM GSTR-4.

NOTE: For current applicable timelines, refer to Important Dates section on www.gst.gov.in




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