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How To Opt-In For Composition Scheme For The Financial Year 2021-22?

Regular GST registered Taxpayers who don’t want to avail ITC facility and who have an aggregate annual domestic PAN-based turnover as per the following limits can opt for the Composition Levy under GST:

  • Up to INR 1.5 Crores (in the previous FY),
  • Up to INR 75 lakhs (in the previous FY) for Taxpayers who are registered in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura & Uttarakhand,
  • Up to INR 50 lakhs (in the previous FY) for Taxpayers supplying services and/or mixed supplies.

However, you cannot opt for the Composition Levy if you are/you undertake:

  • Any supply of goods that are not liable to be taxed under the GST Act,
  • Inter-state outward supply of goods,
  • Supplies through electronic commerce operators who are required to collect tax under section 52,
  • A manufacturer of notified goods,
  • A casual dealer,
  • A Non-Resident Foreign Taxpayer,
  • A person registered as Input Service Distributor (ISD),
  • A person registered as TDS Deductor/Tax Collector.

GST Rates For A Composition Dealer

The GST rates for various Composition Dealers are as follows:

Type of Business CGST SGST Total
Manufacturers and Traders (Goods) 0.50% 0.50% 1.00%
Restaurants not serving alcohol 2.50% 2.50% 5.00%
Other Service Providers 3.00% 3.00% 6.00%

How To Opt-In For Composition Scheme For The Financial Year 2021-22?

The eligible GST registered Taxpayers who want to opt-in for the Composition Scheme for the FY 2021-22 have to file FORM GST CMP-02 on or before 31 March 2021. To file this form, the Taxpayer has to take the following steps:

Step 1: Login on the GST Portal.

Step 2: Under ‘Services’, select ‘Registration’ and then ‘Application to Opt for Composition Levy’.

Composition Scheme

You will be redirected to a new screen – Application to Opt for Composition Levy. Your GSTIN, Legal Name of Business, Trade Name (if any), and Address of Principal Place of Business will be auto-populated and displayed on the screen.

Composition Scheme

The Nature of Business and Jurisdiction will be listed as well.

Composition Scheme

Step 3: In the ‘Composition Declaration’ section, you will have to pledge to abide by the conditions and restrictions applicable to Taxpayers under the Composition Levy.

Composition Scheme

Step 4: Check the box in the ‘Verification’ section to proceed.

Composition Scheme

Step 5: Select the Authorized Signatory from the drop-down menu and enter the Place.

Composition Scheme

Step 6: Once the Authorized Signatory is selected, and the Place is entered, the options to submit the form will get activated. Select the desired mode and sign the application/form:

  • Submit with DSC,
  • Submit with E-sign, or
  • Submit with EVC

Once the application/form is successfully signed and submitted, the system will perform some validations at the back-end. If these are successful, an ARN will be generated and sent to the registered email address and mobile number (SMS) within the next 15 minutes.

Points To Remember

  • Once the Form GST CMP-02 application is filed and accepted, the Composition Scheme will be available to the Taxpayer, w.e.f. 1 April 2021.
  • The taxpayers who already have opted for the composition scheme earlier are not required to opt-in again for FY 2021-2022.

Taxpayers who were regular Taxpayers in the previous FY, but are opting-in for the composition scheme for 2021-22, should file Form GST ITC-03 for reversal of ITC on stocks of inputs, semi-finished goods and finished goods available with them within 60 days from the effective date of opting in

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