GST Composition Scheme

Composition GST Scheme acts as an alternative method for levying a tax under GST. Small businesses registered under the GST composition scheme can pay GST at a fixed rate of turnover every quarter and file quarterly GST returns. Composition levy would be generally related to small taxpayers who are supplying goods and services or both to the end consumer with low turnover. Further, the composition GST scheme has been designed with the aim of making compliance more accessible and cost-effective for the taxpayers. In this article, let us look at the composition scheme in GST, composition scheme limit and composition scheme GST rate in detail.

Eligibility Criteria & GST Composition Scheme turnover limit

Any existing taxpayer whose annual turnover did not cross the Rs.1.5 crore threshold of Rs.75 lakhs in the preceding financial year.

Composition Scheme Limit for Special Eligibility

In the case of states under a special category, except Jammu & Kashmir and Uttarakhand, the limit of GST composition scheme turnover limit has increased from Rs.50 lakhs to Rs.75 lakhs. Hence, the Ministry provided the GST composition scheme turnover limit threshold for Jammu & Kashmir and Uttarakhand as Rs.1 crore and must register under the composition scheme under GST.

Conditions for Availing Composition GST Scheme

The following conditions must be satisfied to avail of this composition levy scheme after meeting the GST composition scheme turnover limit.

The applicant availing for the Composition Scheme in GST must have GST registration.
No Input Tax Credit can be claimed by a dealer opting for composition GST scheme
A person must not be an NRI taxable individual or a casual taxable individual
The taxpayer cannot make any inter-state purchases or supply of goods from a branch located outside the state.
The dealer cannot supply GST exempted goods.
The taxpayer has to pay tax at normal composition scheme GST
rates for transactions under the Reverse Charge Mechanism.
If a taxable person has different segments of businesses (such as textiles, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt-out of the scheme.
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business.
In addition, the taxpayer has to mention the words ‘composition taxable person’ on every signboard, notice, and bill of supply issued and not a tax invoice.
Those supplying goods can then provide services of up to Rs.5 lakh,

Rules on Composition Scheme under GST – Compliance

The submission of various forms under the Composition GST Scheme Rules is meant for specific reasons. The list of forms under Composition GST Scheme Rules with the purposes and due dates are tabulated below for the reference.

S.No.	Forms to be Filed	Description	Due Date
1	Form GST CMP 01	Intimation of willingness to opt for the scheme	Within 30 days
2	Form GST CMP 02	Information pertaining to stock and inward supplies from unregistered individuals	Prior to the commencement of the Financial year
3	Form GST CMP 03	Intimation of withdrawal from the scheme	Within 60 days of the exercise of an option
4	Form GST CMP 04	Show-cause notice on contravention of the Act or rules by the proper officer	Within seven days of the occurrence of the event
5	Form GST CMP 05	The replies to show cause notice	On contravention
6	Form GST CMP 06	An issue of order	Within 15 days
7	Form GST CMP 07	Registration under the Composition GST Scheme	Within 30 days
8	Form GST REG 01	Information of inputs in the stocks finished or semi-finished goods	Prior to the appointed date
9	Form GST ITC 01	Intimation of ITC available	Within 30 days of the option withdrawn
10	Form GST ITC 13	Intimation of willingness to opt for the composition GST scheme	Within 60 days of the commencement of the Financial year

Validity of Composition Scheme Levy

The validity of the composition GST scheme will depend upon the option exercised by a taxable person to pay tax to remain valid so long as all the conditions are fulfilled as specified in the law. However, individuals who are eligible for the composition GST scheme can choose to opt-out of it by simply filing an application.

Online Application Procedure for Composition Scheme in GST

The taxpayers must follow the below steps to Opt for the Composition Levy on the GST Portal, if they are meeting the GST composition scheme turnover limit:

Visit GST Portal

Step 1: Firstly, the taxpayers have to visit theGST portal to Opt for the Composition Levy online. "<yoastmark

Step 2: The applicant shall click on the New Registration under the services tab that is visible on the home page. The following application procedure for composition scheme in GST is of two parts:

New Registration and
Temporary Reference Number (TRN)

New Registration Step 3: By clicking on the New Registration radio button, the new registration page is displayed.

Step 3 - GST Composition Levy Scheme

Then the applicant shall the type of taxpayer from the drop-down list,
Select the state and district for which the registration for composition scheme in GST is required,
Provide a legal business or entity name as mentioned in the PAN database,
After providing the name, enter the PAN of the Proprietor or PAN of the business,
Provide the email address and valid mobile number of the Primary Authorized Signatory,
An OTP will be sent to the registered for mobile number and email address for the verification process as well as
Enter the OTP and captcha given. Then click on the Proceed button.

Login into Portal

Step 4: Click on the ‘Login’ button to access the username and password page. "<yoastmark

Step 5: Enter the correct ‘Username’ and ‘Password’ credentials along with the captcha in the required field and then click ‘login.’

Application to Opt for Composition Levy

Step 6: After logging in, the applicant shall then select ‘Application to Opt for Composition Levy’ from the Registration Menu under the service tab that is visible on the home page to initiate the composition scheme in GST registration. "<yoastmark

Step 7: The page shall redirect to the new page, where the Application to Opt for Composition Levy page will be displayed with the following details:

GSTIN
Legal Name of Business
Trade Name (if any) as well as
Address of Principal Place of Business

Step 8: Below these details, the Nature of business and Jurisdiction will be listed, as shown below: "<yoastmark

Step 9: Below these details, the page shall exhibit the Composition Declaration. The applicant must then check to pledge to abide by the rules and conditions for the Taxpayers who are under the Composition Levy. "<yoastmark

Verification Process

Step 10: Before submitting the application, the applicant must also check the box for the Verification process (below the Composition Declaration) that states that all the information given is true and that nothing has been concealed from the authority. "<yoastmark

Step 11: Finally, the applicant shall select the Authorized Signatory from the drop-down menu. Step 12: Enter the place where the application is filed in the Place field. Step 13: Click the ‘save’ button to save the application form and retrieve it later. "<yoastmark

Submit the Application

Step 14: The options to submit the form gets activated after selecting the Authorized Signatory and the Place. Step 15: Sign the form by using either the Digital Signature Certificate (DSC) or the EVC option. On selecting any of these options below, the applicant shall then receive an OTP.

Using DSC Option

Step 16: If using a DSC, the applicant will be required to select the registered DSC from the emSigner pop-up screen and then proceed from there accordingly.

Using EVC Option

Step 17: Enter the OTP and then click on the Validate OTP button. Step 18: The page will display a prompt to confirm the action. Click on Proceed to move forward to register on the composition scheme under GST. "<yoastmark

Digital Signature Signer

Step 19: The system retrieves the installed digital signatures available using the emSigner. The applicant shall receive a pop-up message to select the desired DSC. After receiving the pop-up message, select the desired signature to receive the confirmation message.

Step 19 - GST Composition Levy Scheme

Acknowledgement Message

Step 20: On successfully filing the application for cancellation of registration, the system shall then generate the ARN and display a confirmation message. Step 21: GST Portal also sends a confirmation message to the registered mobile phone number and email. Step 22: On successfully filing the application to Opt for the Composition Levy, the system generates the ARN for the work item. The ARN shall generate and sends the link to the registered email and SMS within the next 15 minutes. "<yoastmark

Conclusion

The Composition Scheme simplifies compliance for small businesses with reduced tax composition scheme GST rates and minimal filing requirements. The composition scheme GST rate offers a cost-effective solution, allowing eligible taxpayers to focus on growth while adhering to regulations. However, businesses must consider the composition scheme limit and evaluate its restrictions, such as the ineligibility for input tax credit and supply limitations, to determine its suitability.