Small taxable person supplying goods upto 75 lakhs per annum are eligible for composition scheme. [Option lapses if aggregate turnover exceeds Rs.75 lakhs]. They have to pay GST @ 2% in case of manufacturing & 1% in case of trader & 5% in case of food & drink service. Notified suppliers like manufacturer of Ice Cream, edible ice, whether not containing cocoa, Panmasala, Tobacco and manufactured tobacco substitutes cannot opt this scheme.

22 POINTS TO REMEMBER

1. No Interstate outward supply or supply to SEZ units.

2. He is not entitled to ITC and no ITC who purchase from him.

3. Issue bill of supply & shall not collect tax [i.e. not issue tax invoice].

4. Not engaged in Electronic Commerce and Supply of Services except Food & Drink Service [the only service sector which can be compounded].

5. Neither a Casual Taxable person nor a Non Resident Taxable Person.

6. Write the Words composition taxable person on every notice and sign boards and composition taxable person, not eligible to collect tax in every bill of supply.

7. There should be no stock of imported/ interstate purchased items as on 01.07.17.

8. There should be no stock of purchase from unregistered dealer as on 01.07.17. [if tax paid at GST rate for the same can opt this scheme]

9. All registered persons having the same PAN have to opt for composition scheme. If one registered person opts for normal scheme, others become ineligible for composition scheme.

10.Any intimation or withdrawal to one unit is applicable to other units of the same PAN.

11.Pay normal tax for purchase from unregistered suppliers. Reverse charge upto Rs 5000 per day is exempted from GST.

12. Shall file quarterly return in GSTR4 on 18th of the month next to quarter and annual return GSTR9A

13. File GSTCMPO1 during 2017-18 before 17.8.17 or extended period [30.9.17] for option [in this period ie from 1.7.17 till filing date the registered person shall not collect any tax from the appointed day]. Migrants shall file CMPO3 [details of stock] within 60 days from option date. Rule 3.4

14.From 2018-19 onwards file GSTCMP 02 before the starting of the Financial year.

15.No need of renewal every year, can continue till crosses 75 lakhs.

16.He is eligible only if he is not engaged in making any supply of goods which are not leviable to tax under this Act. Sec 10.2.b

17.Where any registered person who has availed of ITC opts composition scheme shall pay an amount by way of debit in the electronic credit/ cash ledger equivalent to the credit of in respect of inputs held in stock in from GSTITC3.sec 18.4, rule 44.4

18. A composition tax payer who ceases that scheme can claim ITC on input goods and capital goods after reducing the tax paid on such capital goods by 5 per cent per quarter of a year or part thereof from the invoice date in form GSTITC01. Sec 18.1.c, rule 40.1

19.A new registrant can fill part B of GSTREGO1 for option.

20.File GSTCMPO4 for withdrawal & GSTITC01 for input in stock.

21.The SCN is in CMPO5 & reply is in CMPO6 & the order is in CMP07.

22.No need of keeping stock register- rule 56.2.

This is only a training material mainly based on the provisions of CGST Act 2017. Personals are advised to go through the laws for statutory compliances. It is only for awareness and not for any legal interpretation of laws.

Siraj, IAC (I), SGST Department, Aluva

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13 Comments

  1. Kochar says:

    Cloth dealer not regd under old Acts, holds stock on 30.06.2017 which was Tax free. Opted for compostion from 01/07/2017.
    Whether liable to pay tax on cloth in stock? Under which Act VAT/GST?
    TRANS for Add. duty ?

  2. Kochar says:

    cloth dealer holding stock on 30.06.2017, was not regd. under olfd Act and all the stock was of tax free goods. Now he has opted for composition from 01/07/2017,
    What tax he has to pay on stock hold as on 30.06.2017. What about trans for additional duty on cloth hold in stock.?
    Kindly advice.

  3. Nikhil Gangar says:

    Really help ful. If same way if u can provide article on composition scheme return and other details, which will be really help ful.

    Thanks

  4. SHIVANSH says:

    Dear sir,
    As stated above in point no. 13 “Migrants shall file CMPO3 [details of stock] within 60 days from option date. Rule 3.4” but from where it have to file as in GST login i am unable to find this form please help me as soon as possible…

    Thanks…

    1. BMS Law Associates says:

      In my view, a registered person who provide any service except food & drink services can not opt composition. In your case also, composition dealer can not provide repair service.

  5. Harish Aery says:

    Can a composition person do minor repairs?
    For instance can a composition person selling watches and clocks do repair of watches. If yes, then will he pay 1% on repair income

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