FAQ’s on Application to Opt for Composition Scheme. Can I opt for the composition scheme. You can opt for the composition scheme if you are a regular taxpayer with an aggregate annual domestic PAN-based turnover not exceeding INR 50,00,000 (Fifty lakhs).
However, you cannot opt for the composition scheme if you are/you make:
- engaged in the supply of services
- any supply of goods which are not liable to be taxed under this Act
- inter-state outward supplies of goods
- supplies through electronic commerce operators who are required to collect tax under section 56
- a manufacturer of notified goods
- a casual dealer
- a Non-Resident Foreign Taxpayer
- a person registered as Input Service Distributor (ISD)
- a person registered as TDS Deductor/Tax Collector
Changes recommended in Composition Scheme on 10th November 2017
The following changes were recommended in the Composition Scheme on the basis of discussions held in the 23rd meeting of the GST Council held at Guwahati today.
- Uniform rate of tax @ 1% under composition scheme for manufacturers andtraders (for traders, turnover will be counted only for supply of taxable goods). No change for composition scheme for restaurant.
- Supply of services by Composition taxpayer upto Rs 5 lakh per annum will be allowed by exempting the same
- Annual turnover eligibility for composition scheme will be increased to Rs 2 crore from the present limit of Rupees 1 crore under the law. Thereafter, eligibility for composition will be increased to Rs. 1.5 Crore per annum.
- The changes recommended by GST Council at (ii) and (iii) above will be implemented only after the necessary amendment of the CGST Act and SGST Acts.
How do I opt for the Composition Scheme?
To opt for the Composition Scheme on the GST Portal, perform the following steps:
- 1. Log in to the Taxpayers’ Interface
- 2. Go to Services > Registration > Application to Opt for Composition Scheme
- 3. Fill the form as per the form specification rules and submit
*Latest update as per 22nd GST Council Meeting held on 6th Oct 2017
Threshold for composition scheme has been increased to 1 crore (from earlier 75 lakhs)
When can I opt for the Composition Scheme?
In order to avail this scheme, you need to file an online application to Opt for Composition Scheme with the tax authorities. Taxpayers who can opt for this scheme can be categorized as below;
1. Migrated Taxpayers: Any taxpayer who are migrated from earlier laws and who have been granted provisional registration would file an application for composition prior to appointed day, but not later than 30 days after the appointed day.
2. New Taxpayers: Any person who becomes liable to register under GST Act, after the appointed day, shall file his option to pay composition amount in the Application for New Registration.
3. Existing Taxpayers: Any taxpayer who is registered as normal tax payer under GST regime shall file an application to opt for Composition Scheme prior to the commencement of financial year for which the option to pay tax under the aforesaid section is exercised.
Is it mandatory to file a Stock Intimation? How do I file a Stock Intimation?
Yes, it is mandatory to file a Stock Intimation.
In case of Migrated Taxpayers and Existing Taxpayers, the taxpayers would also require to file a Stock Intimation to furnish the details of stock including inward supply of goods from unregistered
persons, held by him on the day preceding the date from which he opts to pay composition amount. Taxpayer is required to file Stock Intimation details within 60 days of the date from which Composition Scheme is sought.
The application to opt for Composition Scheme is not subject to approval by the tax authorities. On filing of the application, the concerned taxpayer is marked as a composition taxpayer in the system and consequential changes are made in the system. However, in case it is found that the taxpayer was not eligible for Composition Scheme or he has not filed Stock Intimation, he would be compulsorily pushed out of the Composition Scheme by initiating appropriate proceedings.
Stock Intimation filed by the dealer is not subject to processing by State & Centre Tax Authorities. However, in case it is found out by the tax authorities that the particulars of stock and ITC reversal furnished in the Stock Intimation are incorrect, the tax authorities can initiate appropriate demand proceedings from back office against the concerned dealer.
Note: This document deals only with an existing taxpayer / migrated taxpayer applying to opt for the Composition Scheme. Application by a new User (i.e., not an existing taxpayer) to Opt for Composition Scheme is covered under Application for New Registration.
Can I save the Application to Opt for Composition Scheme?
Yes, the application can be saved for up to 15 days from the date of initiation after which it will be purged by the system.
Saved applications can be accessed using the My Saved Applications functionality available in the Taxpayers’ Interface.
What are the steps to follow to Opt for Composition Scheme?
Step 1 : The existing taxpayer logs in the GST Portal by entering his login credentials.
Step 2 : Existing Taxpayer will select Application to opt for Composition Scheme from the registration menu.
Step 3 : Existing Taxpayer will fill the Form as per “Form Specification Rules”
Step 4 : Existing Taxpayer will be able to save the Form at any point of time for <15> from the date of first saving the form.
Step 5 : Existing Taxpayer has the following options to sign the form: (i) Attach DSC or (ii) E-sign; or (iii) EVC
Step 6 : If the taxpayer opts to attach DSC, he will attach DSC of the Authorised Signatory selected in the Form
Step 7 : If the taxpayer opts for “E-sign”,
- a. System will invoke an API which will request AADHAAR to send OTP.
- b. AADHAAR will send OTP to email and mobile registered against AADHAAR no.
- c. System will prompt user to enter the OTP
- d. Once user enters and submits OTP, System will create a hash of the web form and send hash + Aadhaar no + OTP to e-Sign solution.
- e. E-Sign solution will integrate with AADHAAR to perform e-KYC check and once verified, it will sign the hash and return to GST application.
- f. Application will be successfully submitted
Step 8 : If the existing taxpayer opts for EVC, system will send an OTP to the registered email ID and mobile number of the Authorized signatory. (Taxpayer will be required to enter the OTP.)
Step 9 : Once all the mandatory fields are filled, “Submit” button will get enabled
Step 10 : On click of “Submit”, system will validate all the field level validations, business rules attached to the form as well as DSC/e-Sign/EVC, as the case may be. In case of error it will show appropriate messages related to errors
Step 11 : On successful validations, system will ask for confirmation of submission through a pop up message.
Step 12 : On confirmation, Form will get submitted and system will generate and display Application Reference Number (ARN) Receipt with an option to “Save and Print” the same.
Step 13 : SMS and email will be sent to the existing Taxpayer at his registered email ID and mobile number intimating ARN and successful filing of the form. ARN receipt will also be available in Track ARN status.
SMS and email will also be sent to the other (GSTINs) mapped to the same PAN intimating the submission of “Application form to Opt for Composition” and asking them to file “Intimation of Stock details against their GSTIN.
Must Read –
- GST Registration Consent Letter
- GST Registration Schedule
- How to Register and Update Digital Signature
- GST Migration
- GST Registration Formats
- Registration Under GST
- Documents Required for GST Registration
- FAQs on Registration
- GST Forms
- Registration of Existing Tax Payers at GST Portal
- HSN Code List
- GST Login
- How to Download GST Registration Certificate
- GST New Registration Procedure