The GST has been one of the most significant reforms in the history of indirect taxes in India. With the options of online registration and filing, the GST Act introduced the concept of transparency to the process of paying one’s taxes. Under the Composition Scheme of GST, there are specific special provisions for small taxpayers.
Indeed, the Composition Scheme of GST is a boon for small taxpayers who dread the lengthy online process. Before you delve into how you stand to benefit from the composition scheme gst, it is essential first to find out if you are eligible for the same.
On the 32nd meeting of the GST Council, it was decided that small businesses with a turnover of up to 50 lakhs are eligible for this scheme. In this past, companies with an annual turnover of less than a crore were eligible.
It is to be noted that while calculating the gross annual compensation, all the sub-businesses that are registered in the GST portal under a PAN need to be taken under consideration.
If a person operates their business such that the supply or delivery happens across multiple states, then they are excused from the purview of the Composition Scheme of GST.
This happens even in businesses operating within the state, but the delivery is taking place through an e-commerce service provider.
There are certain industries where service providers cannot reap the benefits of this GST provision. Manufacturers of ice cream, pan masala, or any other type of pan masala are some examples.
Opting for Composition Scheme
Being eligible for the Composition Scheme alone will not allow you to reap the benefits of the same. You need to correctly register yourself at the GST portal and file your GST CMP-02. There is a time window for this filing, and it must be completed in the initial days of every Financial Year.
Once you have filled the GST CMP-02, you can no longer charge any form of taxation to your customers. In such cases, there will be a tax invoice issued, and the business owner has to issue a ‘Bill of Supply’ for each sale.
The Bill of Supply has a particular format, and it must mention the composition taxation person details.
Making GST payments
A composition dealer needs to pay their GST on the supplies that they need for their business and also when they make any purchase from an unregistered dealer. They have to shell money out of their pocket for such GST payments and also for the tax on reverse charge.
If a business person wants to claim the benefits of the Composition Scheme of GST, they need to first file the CMP-02. Here’s how you can proceed with the same.
- Step 1: Go to the GST Portal. This is the official government portal for Goods and Service Tax and all registration, filing, payment, and return claims happen here.
- Step 2: On the top right, the second option is ‘Services’. Click on it and then select the very first option, i.e. ‘Registration’. The second option here is ‘Application to Opt for commission Levy’. Click on it.
- Step 3: Scrolling down the screen will lead you to two dialogue boxes with the headings of ‘Verification’ and ‘Composition Declaration’. Carefully read the conditions before agreeing to it and ticking the checkboxes.
- Step 4: As you scroll and reach the end of the screen, you will find two more boxes. There will be a dropbox on the ‘Name of the Authorised Signatory’. Make your pick and then type in the city of operation of your business under the ‘Place’ section. Save your progress.
- Step 5: On the immediate right of the ‘Save’ button, you will find three options (Submit with DSC, Submit with signature and Submit with EVC). If you are filing this on behalf of your company, then you must click on ‘Submit with DSC’. If not, feel free to choose any of the Submit options.
- Step 6: A pop-up screen will open up that will contain a warning. The warning will tell you that in case any of the details entered by you is found to be false, appropriate action will be taken as per the rules laid in the Provision of Proposed Goods and Services Tax Act, 2016. You must click on ‘Proceed’.
- Step 7: At the final stage of the GST filing, you will be taken to a screen that will tell you that the submission is a success. All the information that you have entered in the form will be automatically checked by the system within the next 10 to 15 minutes. Post that, you will be sent an acknowledgement of the same in the form of an SMS as well as an e-mail.
Within 90 days of filing this, you need to file your CMP-03. Here’s how you can do that.
- Step 1: The initial steps here are the same as filing the CMP-02. Go to the GST portal and first select ‘Services’ and then ‘Registration. Now, select the fourth option on the right, i.e. ‘Stock intimation for opting Composition Levy’.
- Step 2: This will update the screen. Scroll down to find the ‘Download Template’ option on the bottom left.
- Once the Excel Template is downloaded, go ahead and unzip it. Open the unzipped Excel file and enable the macros by selecting the ‘Enable Content’ option.
- Step 3: You will then enter your GSTIN. Upon entering that, select the ‘Insert Rows’ option and enter the number of rows that you want in the pop-up box that comes up. Make sure your documentation is clear and that you have separate tabs for the purchases that you make from registered dealers and the ones from unregistered dealers.
- Step 4: Only when you are confident that all the details have been entered correctly, go ahead, and select the ‘Validate’ option. If there are any errors in your document, the same will come up at this stage. Rectify them and click on ‘Validate’ again.
- Step 5: Just below the ‘Validate’ option, you will find the ‘Generate File to Upload’ option. Clicking on this will create your CMP-03 file for you. Once you download this file, a message will pop up with the destination of the downloaded file.
- Step 6: Now go to the GST portal again and select ‘Stock intimation for opting Composition Levy’. Choose the file from the location noted in the previous step and select ‘Upload & Validate’.
- Step 7: Go to the ‘Details of tax paid’ and select ‘Update Ledger Balance’. With the amount of money in your Electronic Cash Ledger, you should be able to pay off the liability displayed. Upon doing so, a ‘Debit Card Entry No’ will be generated, and you see a success message on your screen.
- Step 8: Repeat Step 4 of the filing of CMP-02 for the verification, place, and name of the authorised signatory. You may then save and submit it with any of the three options(DSC, E-sign, or EVC). The Application Reference Number (ARN) will then be displayed to you along with a success message.
With this, you complete the whole filing process, and you are now well versed on how to how to pay gst online.