Checklist for GST Composition Levy

By | July 25, 2017
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(Last Updated On: July 25, 2017)

Dos and Don’ts under GST Composition Levy

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Following are the Dos and Don’ts under GST Composition Levy

DOs

1. Check your eligibility

a. Calculate your aggregate turnover in the previous financial year. It should be less than Rs.75,00,000/- (in  case of North Eastern States and Himachal Pradesh,this limit is Rs. 50 lakhs)

b. Whether you are making inter-state outward supplies of goods? If yes, you are not eligible for the composition scheme.

c. Whether you are making supplies of any service other than restaurant services? If yes, you are not eligible for the composition scheme.

d. Whether you are having multiple registrations in different states with the same PAN (Distinct persons)? If yes, all other entities registered with the same PAN must also opt for composition scheme.

e. Whether you are casual taxable person or non-resident taxable person? If yes, you are not eligible for the composition scheme.

f. Whether you are making any supply of goods through electronic commerce operator who is required to collect tax at source on such supply? If yes, you are not eligible for the composition scheme.

g. Whether you are making any supply of goods which are not subject to GST? If yes, you are not eligible for the composition scheme.

h. Whether you are manufacturer of such goods as notified by the Government (ice cream, other edible ice, pan masala, tobacco and manufactured tobacco substitutes)? If yes, you are not eligible for the composition scheme.

2. Once you decide to opt for the composition scheme

a. File intimation in Form GST CMP 01 before 31st July 2017, if already registered and migrated to GST. [  Date Extended for filing option for composition scheme under GST : Order No. 01/2017- GST Dated 21st July 2017 ]

b. In case you apply for composition scheme at the time of applying for registration by virtue of crossing the threshold limit of Rs 20 lakhs or 10 lakhs as the case may be, you may give an option to pay tax under the scheme in Part B of FORM GST REG-01, which shall be considered as an intimation to pay tax under the
composition scheme.

c. If already registered under GST and wish to opt for the scheme, file intimation under Form GST CMP-02 on the common portal prior to the commencement of the financial year.

d. Intimation in respect of any one State or Union territory shall be deemed to be an intimation in respect of all other places of business registered on the same PAN.

e. In case you are migrating to GST from earlier tax regime, furnish the stock details in Form GST CMP-03 with in sixty days from the date when option for composition scheme was exercised.

f. No need to file fresh intimation every year. The option exercised by a person for the composition scheme shall be valid as long as the conditions specified for the scheme are satisfied.

g. Furnish Statement in Form GST ITC-03 on GST common portal within sixty days from the commencement of the year; It is an application for intimation of ITC reversal on inputs, inputs contained in semi-finished and finished goods and capital goods in stock in case of opting for composition levy.

3. While continuing under the scheme

a. Issue Bill of supply for every supply in lieu of tax invoice.

b. Mention the words ―composition taxable person, not eligible to collect tax on supplies‖ at the top of every bill of supply issued by you.

c. Mention the words ―composition taxable person‖ on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

d. Pay tax on inward supplies received from unregistered persons.

e. File quarterly returns in GSTR 4 (before 18th of the month immediately following the end of quarter)

f. Pay tax on quarterly basis on or before 18th of the last month of the quarter.

g. In case your turnover during the year exceeds Rs.75,00,000/-, stop paying composition levy and become a normal taxpayer by filing form GST CMP-04

4. In case you decide to opt out of the scheme

a. File FORM GST CMP-04 on the common portal within seven days of occurrence of any such event warranting exit from the scheme.

b. On withdrawal from the composition, take Credit of tax paid on the stock lying with you by filing Form GST ITC-01 within 30 days from the date when the option for withdrawal was exercised, on the common portal, containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock.

DON’Ts

In case you are a composition dealer,

a) Don’t Issue a tax invoice. (Composition dealers need to issue a bill of supply)

b) Don’t avail Input Tax Credit on inward supplies. (Composition dealer cannot avail ITC)

c) Don’t collect any tax from the recipient of your supplies.

d) Don’t continue paying tax under composition scheme in case your turnover during the year exceeds Rs.75,00,000/-

e) Don’t continue paying tax under composition scheme in case you make interstate supplies.

f) Don’t continue paying tax under composition scheme in case you happen to be a casual taxable person or non-resident taxable person.

 

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