How to opt out of GST Composition Scheme?
Sign using DSC
- If you want to proceed using DSC, then Click on the “Submit with DSC” option. Then, click on “Proceed”.
- Click on the “Submit” button with EVC.
- The system will send an SMS and an email to the registered mobile number and email address containing an OTP.
- Enter the OTP and authenticate.
- After the authentication is done, you will receive a “Success” message on your phone.
- An ARN (Application Reference Number) will be generated and the same will be sent via the SMS and email address within 15 minutes of the completion of the authentication.
Check Updated Status in Profile on the GST Portal
Will withdrawal from the GST Composition Scheme affect the Input-Tax Credit?
- The Input Tax Credit can be claimed on the goods bought for production of taxable supplies.
- The document and invoice based on which the Input Tax Credit is to be claimed must be available.
- The date on the invoice must be within 12 months from the date of appointment.
- Reduction of the credit on capital goods by certain percentage as it may be prescribed.
Q1: Can a Composition Dealer avail Input Tax Credit?
No. A composition Dealer cannot avail Input Tax Credit. A taxpayer who has opted for the Composition Scheme to pay taxes under GST cannot take tax credits for his or her input supplies.
Q2: Can a taxpayer opt for a Composition Scheme and later change it to the Regular Scheme?
Yes. A taxpayer can switch between Composition Scheme and Regular Scheme based on his annual turnover. The switch over has to be declared on the GST portal. However, such changes can lead to some alteration in the issuance of invoice and filing of GST returns.
Q3: Can a taxpayer withdraw from the Composition Scheme?
Yes. A taxpayer can withdraw from the composition scheme at any point of time during a financial year due to the below mentioned reasons;
- Voluntary withdrawal
- Engaged in supply of goods that are not taxable under GST Act
- Exceeding the threshold limit as mentioned under Section 10 of the Central Goods and Service Act.
- Manufacturing of Notified Goods
- Supply of goods through an e-commerce operator
- Inter-State Supplies
Q4: How can a taxpayer withdraw from the Composition Scheme on the GST Portal?
A taxpayer has to visit the GST portal and login into his or her account by using the login credential. After logging into the account, the taxpayer has to navigate to Services > Registration > Application for Withdrawal from Composition Levy and fill the form accordingly.
Q5: When is a taxpayer required to withdraw from the Composition levy?
An application to withdraw from the Composition Scheme is needed to be filled within 7 days from the date when the taxpayer becomes ineligible to fulfill the conditions as prescribed under Section 10 of the Central Goods and Service Tax Act/ State Goods and Service Tax Act.
Q6: Which form is required to be filled to withdraw from the Composition Scheme?
Form GST CMP-04 is required to be filled in order to withdraw from the Composition Scheme.
No. A taxpayer does not require any approval from the tax authorities to withdraw from the Composition Scheme.
Q8: Is it compulsory to file an Intimation of Stock Details after withdrawal from the Composition Scheme?
Yes. It is compulsory for a taxpayer to file an intimation of stock details after withdrawal from the composition scheme. A taxpayer has to file a statement in FORM GST ITC-01 with details of stock input, semi-finished goods, and finished goods held by him on the date on which the option was denied, within 30 days from the date on which the application for the withdrawal was filed.