How to Opt-Out of the Composition Scheme?
To withdraw or opt out of the GST Composition Scheme, a taxpayer must file an application in the prescribed format of Form GST CMP-04. The application must also include details of stocks in finished and semi-finished goods, which must be provided in the form of GST ITC-01. After applying, the taxpayer has 30 days to intimate the stock details from the application date.
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A Composition Dealer must submit GST CMP-04 under three situations:
- The taxpayer voluntarily chooses to opt out of the scheme.
- The taxpayer’s turnover exceeds the prescribed limit for the scheme.
- The taxpayer fails to fulfil any of the conditions required to avail of the scheme.
Also Know – Differences Between Regular And Composite Schemes
How to File CMP-04?
Step 1: Log in to the GST portal by adding your login credentials.
Step 2: Once logged into your account, you can access the “Services” section and select “Registration”. You can navigate to the “Application for Withdrawal from Composition Scheme” section from there.
Step 3: When you click on the application page, you will be redirected to the “Intimation/Application for Withdrawal from Composition Levy” page. On this page, you will see a “Date” section where you can select the relevant date from the calendar. Note that the withdrawal date cannot be earlier than the date on which the Composition Levy opted. Additionally, there will be a “Reason” section where you need to select the reason for opting out from the dropdown list.
Step 4: Underneath the date and reason sections is a “Composition Declaration” declaration section. You must review and agree to the terms, conditions, and restrictions of the “Composition Levy”.
Step 5: Following the “Composition Declaration”, there is a section called “Verification”. This section implies that all the information provided is accurate and no relevant details have been concealed from the appropriate authority.
Step 6: To complete the process, click on the “Verification” and “Composition Declaration” boxes. Afterwards, select the name of the authorised signatory, enter the place of a signature, and click on the “Save” option.
Step 7: To sign or verify the form, you can use either the “EVC” or “DSC” options. Please note that using the DSC option requires EmSigner software for the GST portal. If you choose to proceed using DSC, click on the “Submit with DSC” option and then click “Proceed”.
Step 8: The emSigner page will then appear on the screen. Choose the desired signature and click on the “Sign” option.
Step 9: Signing using EVC is also an option. Click on the “Submit” button with EVC, and the system will send an OTP to the registered mobile number and email address via SMS and email. Enter the OTP to authenticate the submission. After the authentication is complete, a “Success” message will appear on your phone. An ARN (Application Reference Number) will be generated and sent to the registered mobile number and email address within 15 minutes of authentication completion.
Conclusion
Opting out of the composition scheme is an easy process that can be completed by following the abovementioned steps. The taxpayer must understand the conditions and limitations of the scheme, and if they exceed the turnover limit or fail to fulfil the necessary requirements, they must opt out of the composition scheme.
