Switching from composition scheme under current regime to normal tax payer under GST will attract transition provision and will be allowed credit of duties held in stocks as inputs or credit of value added Tax in respect of inputs and inputs contained in semi-finished or finished goods on the appointed date subject to the following conditions:
Such inputs or goods are used or to be used in the making of taxable supplies
Not being a composite scheme holder
Being eligible to claim credit of taxes
The inputs were not such that credit was not admissible under the earlier law due to being mentioned in any schedule or otherwise
Being in possession of invoice or document evidencing payment of duties under earlier laws w.r.t. inputs held in stock and semi-finished or finished goods
Such invoices and/ or documents were issued maximum twelve months before the appointed date.
The process to be followed by a person to withdraw from the composition scheme and become a regular tax payer.
1. File an intimation in Form GST CMP-04
A composition tax payer who wants to become a regular tax payer should file an intimation for withdrawal from the composition scheme in Form GST CMP-04. If the move is because the person’s turnover crosses the threshold limit, then Form GST CMP-04 should be furnished within 7 days after becoming liable to register as a regular dealer. Note that an intimation for withdrawal from the composition scheme will be considered as withdrawn for all the places of business registered under the same PAN.
2. Furnish stock statement in Form GST ITC-01
The person moving to the regular scheme has to furnish a statement in Form GST ITC-01 containing details of the stock of inputs, inputs in semi-finished or finished goods held on the day before the date on which he becomes liable to be a regular dealer. Furnishing of Form GST ITC-01 enables the dealer to claim ITC on inputs, inputs in semi-finished or finished goods and capital goods in stock when he/she becomes a regular dealer and it has to be furnished within 30 days after filing Form GST CMP-04.
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