Intimation, Validity, Withdrawal and Denial of Composition Scheme
Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..||Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..||Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..||Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..||Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..||Intimation, Validity, Withdrawal and Denial of Composition Scheme. Check Rules for how to quite from Composition Scheme, Which Form are require? etc..

Intimation for Composition Levy (Rule 1 Composition Rules)
*Latest update as per 22nd GST Council Meeting held on 6th Oct 2017Threshold for composition scheme has been increased to 1 crore (from earlier 75 lakhs) |
- a. Any person who has been granted registration on a provisional basis and who opts to pay tax under section 10 (Composition Scheme), shall electronically file an intimation in FORM GST CMP-01, prior to the appointed day, but not later than thirty days after the appointed day, or such further period as may be extended by the Commissioner in this behalf.
- b. where the intimation in FORM GST CMP-01 is filed after the appointed day, the registered person shall not collect any tax from the appointed day but shall issue bill of supply for supplies made after the said day.
- c. Any provisionally registered person who files an intimation to pay tax under section 10 (Composition Scheme) shall furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the said section, electronically, in FORM GST CMP-03, on the Common Portal within 60 days of the date from which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf.
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Effective Date for Composition Levy (Rule 2 Composition Rules)
(1) The option to pay tax under section 10 (Composition Scheme) shall be effective from the beginning of the financial year, where the intimation is filed under sub-rule (3) of rule 1 of composition rule and the appointed day where intimation is filed under sub-rule (1) of the rule 1 of composition rule.Rule | Category of Person | Effective Date to pay tax under composition scheme |
Rule 1(1) | Intimation is filed by persons registered under the existing law migrates to composition levy | Appointed day |
Rule 1(3) | Intimation is filed by registered persons and Opt for Composition in future | Beginning of Financial Year |
Rule 1(2) | Intimation is filed by a person newly registering under GST Law | a. The intimation shall be considered only after registration
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Validity of Composition Levy (Rule 4 Composition Rules)
- (1) The option exercised by a registered person to pay tax under Composition Scheme shall remain valid so long as he satisfies all the conditions mentioned in the said section and related composition rules.
- (2) Registered person who opted for Composition Scheme shall be liable to pay tax under section 9(1) of CGST Act from the day he ceases to satisfy any of the conditions mentioned in section 10 or related composition rules and shall issue tax invoice for every taxable supply made thereafter and he shall also file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of occurrence of such event
Withdrawal From Composition Scheme
Denial of Composition Scheme
1. Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under section 10 or has contravened the provisions of the Act or these rules, he may issue a notice to such person in FORM GST CMP-05 to show cause within fifteen days of the receipt of such notice as to why option to pay tax under section 10 should not be denied.Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under section 10 or has contravened the provisions of the Act or these rules, he may issue a notice to such person in Form GST CMP-05 to show cause within fifteen days of the receipt of such notice as to why option to pay tax under section 10 should not be denied.Note:
Returns under Composition Scheme
- Quarterly return [GSTR-4] is required to be filed by composition supplier till 18th of the month succeeding quarter. Composition supplier shall also be required to file annual return in Form GSTR-9A.
- Invoice wise details are not necessary, bill of supply will suffice.
- Composition dealers are not required to give HSN code in their returns and they need not mention HSN Code in Invoice, but description of goods is required to be mentioned in the Invoice.
Conclusion
Composition scheme has its own merits and demerits, depending upon type of business, type of transaction, etc. The biggest confusion is for small dealers, whether to opt for composition scheme or not?- Business to Business (B2B): If a taxable person is carrying out business on B2B model, it is tough call for him to opt for the registration as a composition dealer. If he opts for composition Scheme, such a person cannot avail the input tax credit. Further the buyer of goods form composition dealer cannot get any input tax credit, which may result in cost increase due to cascading effect. This may result in a loss of business for a buyer registered as a normal taxpayer and who buys from a person registered under composition scheme. Eventually, such buyers might avoid purchases from a taxpayer under composition levy.
- Business to Consumer (B2C): If a taxable person is carrying out business on B2C model, it may be advantageous for him to opt for composition scheme. If the composition rate is low and the net margins are higher, composition scheme may turn out to be a profitable option for the small B2C trader or manufacturer.