Article explains Rules for Composition Scheme under GST which includes Rule 3: Intimation For Composition Levy, Rule 4: Effective date of Composition levy, Rule 5: Conditions for Composition levy, Rule 6: Validity for Composition levy, Rule 7: Rate of Tax of the Composition levy, Rule 62 : Form & manner of statement and return, Rule 44. Manner of reversal under special circumstances, Rule 80. Annual Return, Section 47 : Levy of Late fees for delay in filing GSTR-9A, Rule 85. Electronic Liability ledger and 138E. Restriction on furnishing of information in PART A of FORM GST EWB-01.
Page Contents
- Rule 3: Intimation For Composition Levy
- Rule 4: Effective date of Composition levy
- Rule 5: Conditions for Composition levy
- Rule 6: Validity for Composition levy
- Rule 7: Rate of Tax of the Composition levy
- Rule 62 : Form & manner of statement and return
- Rule 44. Manner of reversal under special circumstances
- Rule 80. Annual Return
- Section 47 : Levy of Late fees for delay in filing GSTR-9A
- Rule 85. Electronic Liability ledger
- 138E. Restriction on furnishing of information in PART A of FORM GST EWB-01
Rule 3: Intimation For Composition Levy
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Rule 3(1) | Form GST CMP-01 | Intimation to pay tax under section 10 for migrating person under existing law. | 30 days of the appointed day or such period as extended by the Commissioner | Rule 24(1)(b) |
| Proviso to Rule 3(1) | Issue Bill of Supply and shall not collect any tax | |||
| Rule 3(2) | Part B of Form GST REG -01 | Option to pay under composition scheme will be considered as Intimation to pay tax under section 10 | Rule 8(1) | |
| Rule 3(3) | Form GST CMP-02 & Form ITC-03 | Form GST CMP-02 :-Intimation to pay tax under section 10 for persons registered under the Act. Form ITC-03:-Declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under sub-section (4) of section 18 |
Form GST CMP-02: Before commencement of the financial year. Form ITC-03: Within period 60 days of commencement of relevant year. |
Rule 44(4) |
| Rule 3(3A) | Form GST CMP-02 & Form ITC-03 | Intimation to pay tax under section 10 for persons registered under the Act. Applicable only for FY 2017-18 |
Form GST CMP-02: Pay tax from first day of the month immediately succeeding the month in which such intimation is filed . Form ITC-03: Within period 180 days from the day person opts to pay tax under section 10. |
Rule 24, Rule 10(1) & Rule 44(4) |
| Proviso to Rule 3(3A) | Not allowed to furnish Declaration under Form TRAN-1 after Statement in Form ITC-03 has been furnished. | |||
| Rule 3(4) | Form GST CMP-03 | Details of stock, including inward supply from unregistered persons for person who have filed Intimation under sub rule (1) of Rule 3. | Within period 90 days from the day person opts to pay tax under section 10 or as extended by Commissioner | |
| Rule 3(5) | Intimation filed under Sub Rule (1), Rule (3) or Rule (3A) deemed to be applicable to all the places of business registered under the same PAN |
Rule 4: Effective date of Composition levy
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Rule 4(1) | Intimation made under Sub rule (3) of Rule 3: Option to pay tax effective from beginning of the year. Intimation made under Sub rule (1) of Rule 3: Appointed day |
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| Rule 4(2) | Intimation under Sub rule (2) of Rule 3:- Effective after grant of registration. Option to pay tax effective from date fixed under sub rule (2) or (3) or rule 10 |
Rule 10(2): Effective from date person liable for registration (if the person applies for registration within 30 days of becoming liable for registration). Rule 10(3): Effective from date of grant of registration (if the person applies for registration after expiry of 30 days of becoming liable for registration). |
Rule 5: Conditions for Composition levy
| Rule | Form | Description |
| Rule 5 (1) | Following conditions shall be complied:- a) he is not a casual taxable person nor a non resident taxable person. b) he has not purchased goods in course from inter state or received from a branch located outside the state or imported goods or received from an agent or principal outside the state when option exercised under sub rule (1) of rule (3). c) goods held in stock have not purchased from unregistered supplier and if purchased then payment of tax under section 9(4). d) pays tax under section 9(3) and 9(4) on all the inward supplies e) he is not a manufacturer of goods as specified under 10(2)(e) f) Mention “Composition taxable person, not eligible to collect tax on supplies” on the bill of supply. g) Mention “Composition Taxable person” on prominent place |
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| Rule 5(2) | Person is not required to file fresh intimation every year if the same person continues to pay tax under section 10 |
Rule 6: Validity for Composition levy
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Rule 6(1) | Option remains valid as long as the person satisfies all the conditions. | |||
| Rule 6(2) | Form GST CMP-04 | Intimation/Application for Withdrawal from Composition Levy: Person ceases to satisfy any of the conditions. Shall issue tax invoice for every tax invoice issued thereafter. |
7 days from occurrence of such event | Section 9(1) |
| Rule 6(3) | Form GST CMP-04 | Intimation/Application for Withdrawal from Composition Levy: Person intends to withdraw from composition scheme. | Before date of such withdrawal | |
| Rule 6(4) | Form GST CMP-05 | Notice for denial of option to pay tax under section 10: Proper officer has reasons to believe that the registered person:- 1) was not eligible to pay tax under Section 10. 2) contravened provisions of the Act or provisions of this chapter. |
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| Rule 6(5) | Form GST CMP-06 | Reply to the notice to show cause by the registered person. | Reply to Show cause within 15 days of receipt of the notice as to why section 10 shall not be denied. | |
| Form GST CMP-07 | Order for acceptance / rejection of reply to show cause notice | Within 30 days of the receipt of such reply If denial : Date of denial from the date of option to pay tax or from the date of the event concerning such contravention. | ||
| Rule 6(6) | Form GST ITC-01 | Details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock. | Within 30 days from the date:- Option is withdrawn under Form CMP-04 or date of order passed in Form CMP-07 |
Section 18(1)(c) |
| Rule 6(7) | An intimation under Form GST CMP-04 & or denial under Form GST CMP-07 in respect of any place of business is applicable to all other places of business registered under the same PAN. |
Rule 7: Rate of Tax of the Composition levy
| Categories of persons | Rate of Tax | Combined Rate (CGST+SGST) |
| Manufacturers, other than manufacturers of such goods as may be notified by the Government | 0.5% of the turnover of State or UT (State GST rate in addition is equal) | 1% |
| Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II | 2.5% of the turnover of State or UT (State GST rate in addition is equal) | 5% |
| Any other supplier eligible for composition levy under section 10 and the provisions of this Chapter | 0.5% of the taxable turnover of goods & services in State or UT (State GST rate in addition is equal) | 1% |
Rule 62 : Form & manner of statement and return
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Rule 62(1) | Form GST CMP-08 | Statement for payment of self-assessed tax | 18th day of the month succeeding every quarter | Section 10 |
| Form GSTR-4 | Return for financial year of registered person who has opted for composition levy or availing benefit of notification No. 02/2019- Central Tax (Rate) | 30th day of April following the end of such Financial year | Section 10 | |
| Rule 62(2) | Shall discharge liability (tax and interest) by debiting Electronic Cash Ledger. | |||
| Rule 62(3) | Form GSTR-4 | 1.Shall include invoice wise details of inward supplies(inter state and intra state) from registered and unregistered persons.
2. Consolidated details of outward supplies |
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| Rule 62(4) | Form GSTR-1, GSTR-2 , GSTR-3B | Statement/ Return prior to opting of Composition Scheme | Earlier of the following:- 1.Till the date of furnishing the return for the month of September of the succeeding FY 2.Furnishing of Annual Return of the preceding FY. Conditions:- Not liable to avail input tax credit for the period prior to opting of the Composition Scheme. |
Rule 59,Rule 60 & Rule 61 |
| Rule 62(5) | Form CMP-08 & Form GSTR-4 | Person Opting to withdraw from the Composition Scheme at his own or withdrawn at the intense of the Proper Officer | Form CMP-08:-18th day of the month succeeding the quarter in which such withdrawal falls. Form GSTR-4:-30th day of April following the end of such Financial year in which such withdrawal falls. |
Rule 6(3)Rule 6(4) |
| Rule 62(6) | Form CMP-08 & Form GSTR-4 | Person ceases from the Composition Scheme | Form CMP-08:-18th day of the month succeeding the quarter in which such cessation takes place. Form GSTR-4:-30th day of April following the end of such Financial year in which such cessation takes place. |
Rule 6(2) |
Rule 44. Manner of reversal under special circumstances
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Rule 44(1) | Form GST ITC-03 | Declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under sub-section (4) of section 18 | 1.Within period 60 days of commencement of relevant year. 2.Within period 180 days from the day person opts to pay tax under section 10 for FY 2017-18. |
Section 18(4), Rule 3, Rule (3A) |
| A) Inputs held in stock, inputs contained in semi-finished and finished goods held in stock | ||||
| Amount determined as below shall form part of Output tax liability and the details of such amount will be furnished under Form ITC-03 | ||||
| 1.Invoices relating to inputs held in stock are available : Credit of corresponding invoices on which credit has been availed | ||||
| 2.Invoices relating to inputs held in stock are not available : Prevailing market price of the goods as on the date of opting for composition scheme. | ||||
| B) Capital Goods held in stock | ||||
| Amount determined as below shall form part of Output tax liability and the details of such amount will be furnished under Form ITC-03
Input tax credit involved in the remaining useful life in the months shall be computed on pro-rata basis, taking useful life as five years Example:- Capital goods have been used for four years, 6 months and 15 days Useful remaining life in months: 5 months ignoring part of month Input tax credit taken on such capital goods = Rs. 1,80,000 Input tax attributable to the remaining useful life = Input Tax Credit X Remaining life of the Capital good Input tax attributable to the remaining useful life = 1,80,000 X 5 /60 Output tax liability in ITC 03 = Rs. 15,000 |
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Rule 80. Annual Return
| Rule | Form | Description | Time limit | Related Rules/ Section |
| Proviso to Rule 80(1) | Form GSTR-9A | A person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A. | 31st December following the end of such financial year. 2017-18:- Optional to file 2018-19:- Optional to file Optional to file vide Notification No. 47/2019- Central Tax dt. 9th October 2019 |
Section 44(1) |
Section 47 : Levy of Late fees for delay in filing GSTR-9A
| Section | Description |
| Section 47(2) | 1. Rs. 100 per day in CGST 2. Rs. 100 per day in SGST Subject to maximum of 0.25% of the turnover in Sate or UT |
Rule 85. Electronic Liability ledger
| Rule | Description | Related Rules/ Section |
| Rule 87(5) | The amount payable under section 10, shall be paid by Debiting the electronic cash ledger maintained as per rule 87 Crediting electronic liability register | Rule 87 |
138E. Restriction on furnishing of information in PART A of FORM GST EWB-01
| Rule | Description | |
| Rule 138E (1A) | Part A of Form GST EWB-01 | Person paying tax under section 10 [or availing the benefit of Notification No. 02/2019– Central Tax (Rate), dated the 7th March, 2019] has not furnished the statement in Form GST CMP-08 for two consecutive quarters shall not be allowed Furnish PART A of Form GST EWB-01. Categories of Person ineligible to furnish Part A of Form GST EWB-01: Consignor, Consignee, Transporter, e-commerce operator or courier agency whether as a supplier or recipient. |
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