GST Composition Levy Opt-in: Here’s All You Need to Know before the Deadline

The objective of the GST Composition Levy Scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers
GST - GST Composition Levy - GST Composition Levy guidelines - GST Composition deadline details - GST Composition Scheme eligibility - Taxscan

GST Composition Levy Scheme

As the deadline of March 31, 2024, approaches, GST-registered businesses have the opportunity to opt for the GST Composition Scheme for the fiscal year 2024-25. This scheme presents a simplified tax structure for eligible taxpayers, exempting them from regular Goods and Services Tax Return Filings like a regular taxpayer as long as their turnover remains within specified limits.

GST Composition Scheme Eligibility

Businesses, such as eateries, with an annual turnover up to Rs 1.5 crore ( or Rs 75 lakhs for certain northeastern and hill states ), qualify for the GST Composition Scheme. Meanwhile, service providers, excluding restaurants, must maintain a turnover below Rs 50 lakhs to be eligible.

GST Composition Levy Registration/Migration

To join the GST Composition Levy Scheme, taxpayers can opt in during their initial GST registration or before the commencement of the new financial year if they are already registered.

For initial GST registration, the Composition Scheme is an available choice. Existing registrants wishing to transition must electronically submit Form CMP-02 before the beginning of the next financial year.

Existing GST registrants seeking to opt for the Composition Scheme can access the GST portal, proceed to ‘Services’ then ‘Registration’, and choose ‘Application to Opt for Composition Levy’ to complete and submit Form CMP-02. Composition Levy Taxpayers have the flexibility to revert to the standard GST system from the Composition Scheme at any point.

Transition to Regular GST Scheme

Transitioning back to the Regular GST framework is feasible by submitting Form CMP-04 within the fiscal year. This allows for the resumption of regular tax payments and the issuance of tax invoices for all taxable supplies. Moreover, taxpayers can reclaim Input Tax Credit for various stocks and capital goods after this transition.

Composition Levy Exclusions

Certain taxpayers do not qualify for the GST Composition Scheme:

Casual taxable persons who occasionally supply goods/services without a fixed business location within a state/union territory;

Non-resident taxable persons without a fixed business location or residence in India;

Entities involved in inter-state supply of goods and services;

Suppliers of non-taxable goods and services; and

E-commerce platform suppliers responsible for tax collection at source.

Additionally, manufacturers of specific items like ice cream, pan masala, aerated drinks, tobacco products, fly ash bricks, and certain construction materials are prohibited from utilizing the Composition Scheme as per GST Council directives.

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