Category: GST

The option to pay tax under composition levy would remain valid so long as
conditions mentioned in section 10 of the CGST Act, 2017 and Rule 3 to 5 of the CGST Rules, 2017 remain satisfied.

(FAQ 24: COMPOSITION LEVY)

The person exercising the option to pay tax under section 10 shall comply with the following other conditions (in addition to what is stated in answer to Q 4 above), namely: –
a) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and
b) he shall mention the words “composition taxable person” on every notice or
signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

(FAQ 23: COMPOSITION LEVY)

There can be three situations:

1.Persons who have been granted            -The appointed date is 22nd June,2017
provisional registration and who opt
for composition levy (Intimation under
Rule 3(1)

2.Persons opting for composition levy    –     Effective date of registration;           at the time of making application for new     intimation shall be considered
registration in the same registration               only after the grant of
application itself (Intimation under                   registration and his option to pay
Rule 3(2))                                                                        tax under section 10 shall be                                                                                                            effective from the effective date of                                                                                              registration.

3.Persons opting for composition after  –    The beginning of the financial year.
obtaining registration (Intimation
under Rule 3(3))

(FAQ 22: COMPOSITION LEVY)

The option to pay tax under composition scheme will have to be exercised for all States.

(FAQ 21: COMPOSITION LEVY)

The registered person opting to pay tax under composition scheme is required to pay an amount equal to the input tax credit in respect of inputs held in stock and inputs conatined in semi-finished or finished goods held in stock on the day immediately preceding the date of exercise of option. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs. In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as 5 years. Assume capital goods have been in use for 4 years, 6 months and 15 days. The useful remaining life in months will be 5 months ignoring the part of the month. If ITC on such capital goods is taken as C, ITC attributable to the remaining useful life will be C multiplied by 5/60. This would be the amount payable on capital goods. The ITC amount shall be determined separately for integrated tax, central tax and state tax/Union territory tax. The payment can be made by debiting electronic credit ledger, if
there is sufficient balance in the said ledger, or by debiting electronic cash ledger.The balance , if any in the electronic credit ledger would lapse.
Such persons also have to furnish the statement in FORM GST ITC-03 which is a declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under Section 18(4) of the CGST Act, 2017 within a period of sixty days from the commencement of the relevant financial year.

(FAQ 20: COMPOSITION LEVY)

Yes. Such persons need to give intimation electronically in Form GST CMP-02 but from beginning of the financial year only.

(FAQ 19: COMPOSITION LEVY)

No. The option is required to be given electronically in FORM GST CMP-02, prior to the commencement of the relevant financial year.

(FAQ 18:  COMPOSITION LEVY)

Yes. Such persons can give the option to pay tax under the composition scheme in Part B of FORM GST REG-01. This will be considered as an intimation to pay tax under the composition scheme.

(FAQ 17: COMPOSITION LEVY)

Such person is required to furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the composition scheme, electronically, in FORM GST CMP-03, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, within a period of sixty days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf.

(FAQ 16: COMPOSITION LEVY)

Such a person has to electronically file a duly signed/verified intimation in FORM GST CMP-01, on the common portal, prior to 22nd June, 2017 or such further period as may be allowed by the Commissioner.

(FAQ 15: COMPOSITION LEVY)