The GST Composition Scheme Rules are designed to ensure procedural compliance with regard to intimation for the scheme, restrictions and conditions on levy, effective date for levy, tax rate, and validity of levy. The following are the GST composition rules:
Intimation for Composition Levy
Individuals who have already registered under the pre-GST regime, and have received provisional registration and opted for the Composition Levy will have to file an intimation in Form GST CMP 01. This form has to be duly signed within 30 days from the appointed date.
Individuals who have applied for fresh register under GST to select the scheme will have to file an intimation in Form GST REG 01.
Individuals who have registered under GST and have later switched to the Composition Scheme will be required to file an intimation in Form GST CMP 02 to exercise the option. These individuals will also have to submit a statement in Form GST ITC 3 for details of ITC pertaining to inputs contained in finished or semi-finished commodities, and inputs lying in stock, within 60 days from the date on which the relevant financial year began
Restrictions and Conditions for Composition Levy
The individual who opts for the Composition Scheme will have to ensure that he/she is not an NRI taxable individual or a casual taxable individual. He/she must also ensure that the goods in his/her possession in stock on the appointed date should not be bought from a location outside his/her state. He/she must also ensure that the commodities are not considered as imported goods, or inter-state purchases, or purchased from a branch located outside the state, or from principal or agents located outside the state.
Effective Date for Composition Levy
Individuals who have already registered under the pre-GST regime will be required to pay tax under the Composition Scheme on the appointed day. Those who have registered under GST and then switched to Composition Scheme will also have to file an intimation. Those who have applied for fresh register under GST will be required to pay tax under the Composition Scheme from where the registration application has been furnished within 30 days from the date on which said individual becomes liable for registration.
Different categories of registered individuals will be charged with different tax rates. For instance, manufactures are charged 1% CGST, 1% SGST and 2% overall; suppliers are charged 2.5% CGST, 2.5% SGST, and 5% overall; and other supplies are taxed at 0.5% CGST, 0.5% SGST, and 1% overall.
Validity of Composition Levy
The validity of composition levy will depend upon whether or not the aforementioned conditions are fulfilled. However, individuals who are eligible for the scheme can choose to opt out of it by simply filing an application.
Composition Scheme Rules under GST – Compliance
Composition Scheme Rules under GST cover the submission of various forms that are meant for certain reasons. Here is a table with a list of forms and the reasons for which they can be used:
|Form GST CMP 01||For opting the scheme by provision registration holders|
|Form GST CMP 02||For intimation of willingness to opt for the scheme|
|Form GST CMP 03||For information pertaining to stock and inward supplies from unregistered individuals|
|Form GST CMP 04||For intimation of withdrawal from the scheme|
|Form GST CMP 05||For show cause notice on contravention of the Act or rules by proper officer|
|Form GST CMP 06||For reply to show cause notice|
|Form GST CMP 07||For issue of order|
|Form GST REG 01||For registration under the Composition Scheme|
|Form GST ITC 01||For information of inputs in stocks, finished or semi-finished goods|
|Form GST ITC 13||For intimation of ITC available|