Guide For GST Composition Scheme For Dealers - Process & Rules
Guide For GST Composition Scheme For Dealers - Process & Rules

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Date: 20 Sep 2022


Everything About GST Composition Scheme For Dealers

While the introduction of GST has led many businesses to register under GST Act 2017, attentive tax registration such as a composition scheme is also available for the benefit of small businesses. Comparing the GST composition scheme to the former composition scheme that ran under the earlier VAT regime reveals some significant differences. Businesses with combined annual revenue of less than Rs. 1.5 crore are now eligible for the GST composition plan (a lower limit is applicable in the case of particular category states).

Returns To Be Filed By A Composition Scheme Dealer

A dealer-registered under the GST composition scheme is required to file GSTR-4 annually. Taxpayers who choose the composition plan are required to submit GSTR-4 annually. The return was filed every quarter and eventually superseded CMP-08 until the fiscal year 2018–19. GSTR-4 is a GST return that has to be filed by the composition dealer. Generally, an average taxpayer has to file three months' returns. In contrast, under the composition scheme, dealers are required to file only one return which is GSTR-4, once a year by the 30th of April following a financial year.

Who Should File GSTR-4?

A taxpayer opting for a composition scheme is required to file GSTR-4. It also covers a special composition scheme notified for service providers vide the CGST (Rate) notification number 2/2019 dated 7th Mach 2020 with effect from FY 2019-20.

Process Of Return Filing And Tax Payment By A Composition Scheme Dealer

Below are the steps to file GST CMP-08 (Payment of self-assessed tax) on the GST portal. 

  • Login to the GST portal, select the financial year and choose the return filing period for the relevant quarter. Proceed by clicking on the 'search' button. Click 'Prepare Online' for the form CMP-08 (Payment of self-assessed tax).

  • Complete the summaries of the cost of supplies and the amount of tax due over three months. Enter the interest amount if you submit CMP-08 after the applicable due date with a delay. Tick the checkboxes on 'File NIL GST CMP-08 in the following cases:

    • If it has no supplies going out during the chosen return period, no tax is due.

    • Due to the absence of inward supplies for which the tax is payable on a reverse charge basis, it has no output tax liability (including import of services).

    • If there are no additional tax obligations. 

 

To save the entered details, click "Save."

 

  • Click "Preview Draft GST CMP-08" to confirm the accuracy of the information entered.

  • Make your payment using the remaining cash in the electronic cash ledger, or click "Create Chalan" to select either net banking or NEFT if there is insufficient cash. Confirm the details submitted by checking the boxes against the declaration statement. Submit the CMP-08 using Electric Verification Code (EVC) or digital signature (DSC). You will get a message confirming the filing of CMP-08. GSTN generates ARN on the successful filing of CMP-08. The taxpayer will receive an SMS or email at the registered mobile number or email address.

GST Composition Scheme rules

Under the GST Act's provision, a range of businesses in the manufacturing and service sectors, including restaurants and traders, are allowed to register under the composition scheme. However, the GST composition scheme does not apply to the following person/entities:

  • A non-resident taxable person or casual taxable person.

  • Businesses supplying goods through an e-commerce portal operator that collects tax at source (u/s 52).

  • Businesses engaged in inter-state supply of goods.

  • Manufacturers of ice creams and other edible ice with/without coca as addictives. 

  • Manufacturers of pan masala, tobacco goods, and tobacco alternatives.

  • Companies that have acquired products from unregistered providers (allowed if GST is paid on such goods on a reverse charge basis).

  • Supplies involved in the supply of goods exempted under the GST act.  

Composition Scheme Rules Under GST Compliance

Composition scheme rules under GST provide for the submission of different forms meant for respective purposes followed by the due date for submission of such forms, which are given below:

Form Required Purpose Due Date
Form GST CMP-01 To opt into the schemes by provisional GST registration holder (From VAT regime) Within 30 days of the specified date or before the scheduled time.
Form GST CMP-02 Intimation of willingness to opt into GST schemes registered regular taxpayers Before the beginning of the fiscal year
Form GST CMP-03 Information on the inventory and incoming goods from registered and unregistered parties Within 90 days of the exercise of the option
Form GST CMP-04 Intimation of withdrawal from the scheme Within 7 Days of the event
Form GST CMP-05 A proper official has given a show cause notice for a rule or act violation On any contravention
Form, GST CMP-06 Reply to show cause notice Within 15 days
Form GST CMP-07 Issue of order Within 30 days
Form GST REG-01 Registration under the composition scheme Before the appointed date
Form GST ITC-01 Details of inputs in stocks finished and semi-finished goods 30 days of withdrawing option
Form GST ITC-03 Intimation of ITC available Within 60 days of commencement of the financial year

All the forms mentioned above must be duly signed and electronically filed on the common portal, either directly or through a facilitation centre notified by the commissioner. 

Conclusion 

Anyone who chooses the plan is assumed to have selected all the locations of their firm with the same registered PAN. As a result, you cannot select any business location to register under this plan. The GST composition system guidelines are intended to be stringent and transparent for the person using the composition scheme.