Sri Snigdha (Articles Assisstant) (498 Points)
13 June 2017
Ravi Reddy
(ca final)
(139 Points)
Replied 13 June 2017
Read the complete procedure
1.Conditions and restrictions for composition levy as specified in rules
The person exercising the option to pay tax under section 10 shall comply with the following conditions [rule
3(1) of Composition Rule].
(a) he is neither a casual taxable person nor a non-resident taxable person.
(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-
State trade or commerce or imported from a place outside India or received from his branch situated
outside the State or from his agent or principal outside the State, where the option is exercised under
rule 1(1);
(c) the goods held in stock by him have not been purchased from an unregistered person and where
purchased, he pays the tax under section 9(4).
(d) he shall pay tax under section 9(3) or section 9(4) on inward supply of goods or services or both
received from un-registered persons;
(e) he was not engaged in the manufacture of goods as notified under section 10(2)(c) of CGST Act,
during the preceding financial year;
(f) he shall mention the words "composition taxable person, not eligible to collect tax on supplies" at the
top of the bill of supply issued by him; and
(g) he shall mention the words "composition taxable person" on every notice or signboard displayed at a
prominent place at his principal place of business and at every additional place or places of business.
Fresh declaration every year - The registered person paying tax under section 10 may not file a fresh
intimation every year and he may continue to pay tax under the said section subject to the provisions of the Act
and these rules - rule 3(2) of Composition Rules.
2. Procedure for exercising option to avail composition scheme
Any person who has been granted registration on a provisional basis under rule 16(1) of Registration Rules
and who opts to pay tax under section 10, shall electronically file an intimation in form GST CMP-01, duly
signed, on the Common Portal, either directly or through a Facilitation Centre, before 30-7-2017, or such
further period as may be extended by the Commissioner.
Where the intimation in form GST CMP-01 is filed after 1-7-2017, the registered person shall not collect any
tax from 1-7-2017 but shall issue bill of supply for supplies made after the said day - rule 1(1) of Composition
Rules.
2-1 Submission of stock statement on date of option
Any person who files an intimation under rule 1(1) to pay tax under section 10 shall furnish the details of stock,
including the inward supply of goods received from unregistered persons, held by him on the day preceding the
date from which he opts to pay tax under the said section, electronically, in form GST CMP-03, on the
Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, within sixty days
extended by the Commissioner in this behalf.- rule 1(4) of Composition Rules.
2.2 Intimation while applying for registration is sufficient from fresh registrations
Any person who applies for registration under rule Registration may give an option to pay tax under section 10
in Part B of form GST REG-01, which shall be considered as an intimation to pay tax under the said section.
Then further intimation is not required - rule 1(2) of Composition Rules.
2.3 Further intimation every year prior to commencement of financial year
Any registered person who opts to pay tax under section 10 shall electronically file an intimation in form GST
CMP-02, duly signed, on the Common Portal, either directly or through a Facilitation Centre, prior to the
commencement of the financial year for which the option to pay tax under the aforesaid section is exercised.
He shall furnish the statement in form GST ITC-3 in accordance with the provisions of rule ITC 9(4) within
sixty days from the commencement of the relevant financial year - rule 1(3) of Composition Rules.
Any intimation under rule 1(1) or rule 1(3) in respect of any place of business in any State or Union territory
shall be deemed to be an intimation in respect of all other places of business registered on the same PAN.
3. Effective date for composition levy
The option to pay tax under section 10 shall be effective from the beginning of the financial year, where the
intimation is filed under rule 1(3) of and the appointed date (i.e. 1-7-2017) where intimation is filed under rule
1(1) of the said rule.
The intimation under sub-rule 1(2) shall be considered only after grant of registration to the applicant and his
option to pay tax under section 10 shall be effective from the date fixed under sub-rule 3(2) or 3(3) of
Registration Rules - rule 2 of Composition Rules.
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