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’.
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.
The Nature of Business and Jurisdiction will be listed as well.
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.
Step 4: Check the box in the ‘Verification’ section to proceed.
Step 5: Select the Authorized Signatory from the drop-down menu and enter the Place.
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