Last 10 Days Left to Opt. for Composition Scheme 2024-25

21.03.2024: The functionality to opt-in for the composition scheme has been made available for FY 2024-25 in the Dashboard of taxpayers at Common Portal.

Therefore, the eligible taxpayers, who wish to avail of the composition scheme may opt-in for composition up to 31st March 2024.

Here is how to do it.

Regular taxpayers can opt for Composition Scheme for Financial Year 2024-25 by navigating as ‘Services-> Registration-> Application to Opt for composition Levy’ and filing Form CMP-02. This facility is available on GST Portal till 31st March 2024.

Who is Eligible for the Composition Scheme?

The Following Normal taxpayers, who don’t want to avail ITC facility, may opt for this scheme:

• A person having aggregate turnover (at PAN level) up to Rs. 1.5 Crore in the previous FY.
• The person having aggregate turnover (at PAN level) up to Rs. 75 lahks in the previous FY and who are registered in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura & Uttarakhand.
• The person supplying services and/or mixed supplies having aggregate turnover of previous FY up to Rs. 50 lakhs.

Who is not eligible?

– Any supply of goods that are not liable to be taxed under CGST Act

– Inter-state outward supplies 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

Read more About Composition Scheme under GST

How to opt for the Composition Scheme in GST?

The eligible registered taxpayers have to file FORM GST CMP-02 application, on or before 31st March 2024. This can be done after login on the GST portal. Here are the steps.

• Click on Services > Registration > Application to opt for Composition Levy>Filing form GST CMP-02>File application under DSC/EVC

• After the GST CMP-02 application form is filed, the composition scheme will be available to the taxpayer, w.e.f. 1st April 2024.
• The existing taxpayers who already opted in for the composition scheme are not required to opt in again for FY 2024-2024.
• Existing regular taxpayers from the previous FY, but are opting in for the composition scheme for 2024-25, must file Form GST ITC-03 for reversal of ITC on stocks of inputs, semi-finished goods, and finished goods available with them. This has to be done within 60 days from the effective date of opting.

Overview of Composition Scheme

The composition scheme, often referred to in the context of taxation, is a simplified tax scheme designed to reduce the compliance burden on small businesses. It is typically implemented by tax authorities to facilitate easier tax compliance for small taxpayers.

Here’s how it generally works:

1. Eligibility: The composition scheme is usually available to businesses with a turnover below a certain threshold. This threshold varies from country to country and is set by the tax authority.
2. Simplified Taxation: Under the composition scheme, eligible businesses pay tax at a fixed rate or a reduced rate on their turnover, rather than going through the regular process of calculating and paying tax on individual transactions.
3. Limited Input Tax Credit: In return for the simplified taxation, businesses under the composition scheme might have limited or no ability to claim input tax credit on their purchases. This means they cannot offset the tax they’ve paid on inputs against the tax they owe on their sales.
4. Reduced Compliance Requirements: Since the tax calculation is simplified, businesses under the composition scheme have reduced compliance requirements. They may not need to maintain detailed records of their transactions as compared to businesses under the regular tax regime.
5. Voluntary or Mandatory: Depending on the jurisdiction, participation in the composition scheme might be voluntary or mandatory for eligible businesses.
6. Sector-specific Variations: Some countries may have variations of the composition scheme tailored for specific sectors, such as restaurants or retail businesses, where the turnover is usually smaller transactions.
7. Limitations: There are usually limitations on the type of businesses that can opt for the composition scheme. For example, businesses engaged in the sale of goods across state lines or those involved in export activities might not be eligible.

Overall, the composition scheme aims to simplify tax compliance for small businesses, allowing them to focus more on their operations rather than dealing with complex tax calculations and paperwork. However, businesses need to carefully evaluate the pros and cons of opting for the composition scheme based on their specific circumstances.

Read more about the composition scheme

• Read composition scheme rate notification for the supply of services
• Composition scheme for beginners
• Composition scheme rules

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