GSTN released an advisory on opting in Composition Scheme for FY 2020-21

The GSTN (Goods and Services Tax Network) released an advisory on opting in composition scheme for the financial year 2020-21. The advisory contains the following sections:

  • How to opt-in for composition scheme
  • Return and Payment of Tax
  • Who are eligible for the scheme
  • Who are not eligible for the scheme

How to opt-in for composition scheme

The window to opt for the composition scheme for the financial year 2020-21 is available on the GST portal. The eligible registered taxpayers who wish to opt-in composition scheme has to apply in FORM GST CMP-02 on the common portal until 31 March 2020. If the taxpayer is already under composition scheme in the preceding financial year, there is no need to opt-in again for composition.

Taxpayers can navigate as follows: Log-in > Services > Registration > Application to opt for Composition Levy > Filing form GST CMP-02> File application under DSC/EVC. Once the application for CMP-02 is filed, the composition scheme will be available for taxpayer w.e.f. 1 April 2020.

The taxpayers who were a regular taxpayer in the preceding financial year but are opting-in composition scheme for FY 2020-21 has to file GST ITC-03. This form is for reversal of ITC credit on stocks of inputs, semi-finished goods and finished goods available with him within a period specified by Rule 3(3A) of CGST Rules, 2017.

Also Read: Voices seek a GST Exemption on Telecom & Other License Fees

Return and Payment of Tax

All taxpayers who opt-in for composition are required to file the following returns

  • Form GST CMP-08, every quarter to declare the supplies and to discharge the GST liability
  • Form GSTR-4 on an annual basis

Who are eligible for the scheme

Following taxpayers are eligible for opting the composition scheme:

1. The normal taxpayers who have aggregate turnover below Rs.1.5 crore in the previous financial year (PFY), who doesn’t want to avail ITC facility.

2. The normal taxpayers who have aggregate turnover (at PAN level) below Rs.75 lakh in the PFY who are situated in the following states:

  • Arunachal Pradesh
  • Manipur
  • Meghalaya
  • Mizoram
  • Nagaland
  • Sikkim
  • Tripura and
  • Uttarakhand

3. The normal taxpayers supplying services and/or mixed supplies having aggregate turnover of last financial year below Rs.50 lakh.

Who are not eligible for the scheme

 The following persons are not eligible for opting the composition scheme:

  1. Suppliers of the goods or services who are not liable to be taxed under GST
  2. The taxpayers supplying through e-commerce operators
  3. Inter-State outward suppliers of goods/services
  4. The manufacturers of notified goods like 

(i) Ice cream and other edible ice

(ii) Tobacco and manufactured tobacco substitutes

(iii) Pan Masala

(iv) Aerated water

  1. A Casual taxpayer (CTP)
  2. A Non-Resident Foreign Taxpayer (NRTP)
  3. The person who registered as TDS Deductor/Tax Collector
  4. The person who registered as Input Service Distributor (ISD)

For any clarifications/feedback on the topic, please contact the writer at  dvsr.anjaneyulu@cleartax.in

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