GSTN advisory on Opting-in for Composition Scheme for the Financial year 2021-22
The composition scheme was created specifically for small taxpayers to help them avoid the complexities of the GST framework and compliances. Small registered taxpayers should pay a flat rate of tax based on their annual revenue.
For the financial year 2021-22, the Goods and Service Tax Network (GSTN) has released an advisory on opting into the Composition Scheme.
1. How to sign up for the Composition Scheme:
- Eligible registered taxpayers who wish to participate in the composition scheme for the fiscal year 2021-22 must submit a FORM GST CMP-02 application on or before March 31, 2021, after logging into the GST portal. The taxpayers will use the following navigation:
Log-in>Services > Registration > Application to opt for Composition Levy>Filing form GST CMP-02>File application under DSC/EVC
- The composition scheme will be available to taxpayers beginning April 1, 2021, after Form GST CMP-02 is filed.
- Taxpayers who have previously opted into the composition scheme are not obliged to do so again for FY 2021-2022.
2. Who is eligible to participate in the Composition Scheme: – After that, This scheme is available to ordinary taxpayers who do not want to take advantage of the ITC:
- A previous fiscal year’s aggregate turnover (at the PAN level) of up to Rs. 1.5 crore
- Companies registered in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand with an aggregated turnover (at PAN level) of up to Rs. 75 lakh in the previous fiscal year.
- providing services and/or mixed supplies with a turnover of up to Rs. 50 lakhs in the previous fiscal year.
- Regular taxpayers who opt-in for the composition scheme for FY 2021-22 must 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 of the effective date of opting in.
3. Who is ineligible to participate in the composition scheme:
- Suppliers of goods and services who are not required to pay GST
- Inter-State exporters of goods and services
- Taxpayers are obliged to collect tax under Sec 52 and supply products through e-commerce operators.
- Producers of notified products such as ice cream and other edible ice, whether or not containing cocoa, tobacco and manufactured tobacco substitutes, Pan Masala, and aerated water