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GST Composition rules | Company Vakil

GST Composition rules give information on a procedure like a levy validity, levy restrictions, tax rate and the effective date of levy here you can see the details of levy composition effective date and intimation on that.

Business registered already under pre gst regime

Business which has provisional registration like registration under service tax, central excise law, vat and looking for levy composition would require form gst cmp-01 needs to sign before 30 days of appointment in case the registration is filed after appointment day the business will not be able to make bill for supply and will be unable to collect tax

Form GST CMP-03 is required to be filled in 60 days of the exercise for stock details and goods received for inward supply by unregistered business on the date preceding the day of the exercise of the option.

For a business to apply for fresh registration to opt scheme under gst

Form gst reg01 is required to fill for fresh registration under gst scheme to give intimation

Switching to a composition scheme for a registered person under composition scheme

All the registered business under gst who have opted to make tax payments under composition scheme would need to give intimation in form gst cmp-02 for exercise option and form gst itc 3 for input lying in stock related to itc, semi-finished and finished goods contained within 60 days of starting of the financial year

Based on the central tax notification number 45/2017 issued 13th October 2017

  • The effective date of the composition will be 1st of next month like if the form by a registered person is submitted on 10th December than the composition scheme will be effective an applied from 1st January.
  • The extension has been given to opt for the scheme to 31st March 2018
  • Form gst itc 03 needs to be submitted within 90 days from the date of composition levy
  • Before form gst itc 03 is furnished Tran-1 needs to be filed
  • If the registered business choose to pay tax under composition scheme from the 1st day of the month, but its not quarters a first month

composition levy effective date

Composition scheme shell be effective to pay tax for the person already registered under pre gst regime and a business switches to a composition scheme who is already registered under gst

For business or person who applied for fresh registration under gst to opt the composition scheme the effective scheme date should be from

The application for registration should be submitted within 30 days from the day a person is liable for registration, the date for grant of registration will be the effective date of registration

Composition levy conditions and restrictions

  • The person should look for composition scheme should not be a non-resident taxable person and also shouldn’t be a taxable casual person.
  • From the appointment date the goods in the stock must not be purchased outside the state, also goods shouldn’t be classified as, Imported goods, Interstate purchase, Agents or principal situated outside the state, interstate purchase
  • In case the registered taxpayers make and business with unregistered person tax required to be paid or stock must be held as no stock
  • In his invoice, this must be a mandatory “Composition taxable person, not eligible to collect tax on supplies”
  • In his business premise in signboard and every notice following should be mandatory “Composition taxable person”
  • He doesn’t the manufacturer of those goods and the government can send a notice for preceding the financial year

Composition levy validity

It is based on conditions fulfillment, but it requires to filing an application for even an eligible person to opt out from the scheme, a show cause notice can be served by gst officer if he feels that taxpayer is not eligible for the scheme or hasn’t followed the act and rules

Tax rate

The rate of tax for different categories for manufacturer and traders on goods cost is 0.5% and cgst is 0.5% and the total is 1% for restaurants not serving Alcohol sgst is 2.5% and cgst is 2.5% and the total is 5%

GST Compliance – Composition scheme rules

It requires pre defined forms to be filled in composition scheme rules based on purpose every form is defined with due date for form submission form gst cmp 01 to be used for the purpose to opt for scheme by provision registration holder and the due date is prior to appointed date or within 30 days of the said date, form gst cmp 02 is required for the purpose of intimation of willingness to opt for scheme and due date is prior to commencement of financial year,Form gst cmp 03 for purpose of details of stock and inward supplies from unregistered person and the due date is with in 90 days of exercise of option,form gst cmp 04 for the purpose intimation of withdrawal from scheme and the due date is within 7 days of occurrence of event, Form gst cmp 05 the purpose of this form is show cause notice on contravention of rules of act by proper officer and the due date is on contravention, Form gst cmp 06 is to be used for the purpose of replying to show cause notice and due date is within 15 days,Form gst cmp 07 the purpose of this form is to give issue of order and the due date is within 30 days, Form gst reg 01 needs to be used for the purpose of registration under composition scheme and the due date is prior to appointed date , Form gst itc 01 is to be used for details of the inputs in stocks,semi-finished and finished goods and due date is 30 days of option withdrawn, form gst itc 03 is to be used for purpose of intimation of itc available and the due date is within 60 days of commencement of financial year. These forms require authorized signatory duly signed and filled online of gst portal directly or from facilitation center notified by the commissioner

Above we have given brief details on gst composition rules and briefly discussed gst composition scheme rate so taxpayers can have a fair idea of what is composition scheme under gst as composition scheme in gst is optional for taxpayers and has its own benefits of gst composition the taxpayers must read all the gst composition scheme rules.There is a prescribed format one needs to follow to become composition dealer as composition scheme in gst requires certain documentation to be filed for proper officer, to complete the process for composition scheme gst, as said earlier we have covered almost all facts related to gst composition scheme, but its advised to check common portal for composition scheme under gst

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