There are various demerits of Composition Scheme which taxpayers have started to realize if the...
We have covered the basic features, merits and demerits of Composition Scheme in our earlier articles. Now let’s discuss the rules for composition scheme under GST. These rules cover the topics of intimation procedure, effective date, conditions, restrictions, validity, and rate of tax regarding the composition scheme.
If any taxpayer wishes to seek registration under section 10 of the Act, then he is required to give intimation about his intention to apply for registration under the scheme. For this purpose, taxpayers are divided into the following categories:
Registered under any old laws like VAT, CST, Service Tax etc. which are to be replaced by GST.
These taxpayers are required to file intimation in Form GST CMP-01, on the common portal either;
A taxpayer who was not covered under any of the old laws, but wish to seek registration under the GST and also wish to apply for registration under Composition Scheme, then the taxpayer can intimate by providing the information in Part-B of Form GST REG-01, the form for applying for registration under GST.
NOTE: Despite these rules specified initially, there have been many extensions granted by the GST Council. After the last such notification, the last date for availing the Composition Scheme benefit has been extended until 31st March 2018. This option can be availed by taxpayers who got fresh GST Registration as well as taxpayers who have migrated to GST from old tax laws.
They are required to file:
The pre-conditions of the composition scheme are as follows:
The validity of composition scheme depends upon various factors and conditions; let’s discuss them one by one:
If conditions are satisfied: If any registered taxable person who has opted for composition scheme and satisfied all the conditions laid thereon, then he is not required to file for fresh registration every year and his registration will remain valid.
If conditions are not satisfied: On the other hand if the conditions mentioned are not satisfied then he will be required to pay tax as a normal taxpayer. All the privileges will be withdrawn and he is required to issue tax invoices to all the registered customers. He will also be required to file intimation of such withdrawal in FORM GST CMP-04 within 7 days.
Voluntary Withdrawal: If any taxpayer decides to withdraw from the scheme on his own, then he will be required to file an application for the same in FORM GST CMP-04.
If the officer has reasons to believe in ineligibility: In case proper officer is of the opinion that:
Then he should issue a notice to such registered person in FORM GST CMP-05 within 15 days. The registered person is required to submit his reply in FORM GST CMP-06. The proper officer shall issue his order in FORM GST CMP-07 within 30 days either accepting or denying it.
Whenever any order is passed in FORM GST CMP-07 regarding withdrawal from composition scheme, then the taxpayer is required to furnish a statement in FORM GST ITC-01 containing details of input stock as well as inputs held in semi-finished and finished goods. Such withdrawal can either be initiated by the taxpayer or by proper officer due to any contravention.
Such intimation is to be filed within 30 days of withdrawal from composition scheme.
The rules for composition scheme under GST have been targeted to be strict but crisp for person availing of the composition scheme. In case of any GST related query, contact Enterslice.
Read our article: An Abstract of GST on Joint Development Agreement (JDA)