GST Form CMP 02: Advisory on Opting-in for the Composition Scheme by Filing this Form

Recently, on 18^th February 2020, the Central Board of Indirect Taxes and Customs (CBIC) has released an advisory regarding the filing of the Form GST CMP-02 for Opting-in the Composition Scheme for the Financial Year 2020- 2021. Further, the concept of Composition Scheme was launched by the Government and CBIC for benefiting the small businesses, by making GST filing comparatively easier and more cost-effective for them. Furthermore, the small businesses opting in for the Composition Scheme are required to pay GST (Goods and Service Tax) at a fixed rate of their annual turnover and are also required to file GST returns on a quarterly basis.

In order to opt for the Composition Scheme, it is mandatory and obligatory for the concerned taxpayer to register himself under the provisions of GST (Goods and Service Tax) law. Further, the concept of the Composition Scheme is provided under the provisions of section 10 of the CGST (Central Goods and Service Tax) Act, 2017. Moreover, the main reason behind launching the Composition Scheme was to make GST compliance easier and hassle free for small taxpayers. According to this scheme, a composition dealer is not required to maintain any elaborate accounts and records. Also, such a taxpayer now needs to file an annual return in the form GSTR-4 and also needs to make payment of tax on the self-assessment basis quarterly in the Form GST CMP-08.
 

Further, the Composition Scheme is a simple and easy scheme under the GST (Goods and Service Tax) for taxpayers. Moreover, small taxpayers can now get rid of monotonous GST formalities and can easily pay GST at a fixed rate of turnover. Furthermore, this scheme can be chosen by any taxpayer whose annual turnover is less than Rs. 1 crore. But it is significant to note that CBIC (Central Board of Indirect Taxes and Customs) has notified the increase in the threshold limit from Rs 1 Crore to Rs. 1.5 Crores.

Lastly, this learning article talks about the recently released advisory by the Central Board of Indirect Taxes and Customs (CBIC) regarding the filing of the Form GST CMP-02 for Opting-in the Composition Scheme for the Financial Year 2020- 2021.

CMP-01 is the GST Form which aims at enabling the Migrated taxpayers who desire to opt-in for the Composition Scheme. Further, the due date for filing this GST form was 1st August 2017 (1 month from July 2017)

GST Form CMP-02 is an online application form that is required to be filed by any taxpayer who is registered under the provision of Goods and Service Tax (GST) as a normal taxpayer. Also, such a form is required to be filed at the official GST portal before the commencement of the concerned financial year for which the decision to pay composition tax is exercised. Further, a new taxpayer who becomes qualified to register himself under the provisions of the GST act is also eligible to file an application to opt-in for the Composition scheme with the tax authorities.

But it is pertinent to note that such a taxpayer further needs to file an online application in order to opt for the composition scheme in the Form GST REG-01, this concerning form is an application required for new registration. However, if in case a taxpayer who is already registered under the existing law and but now wants to migrate into the composition scheme under the provisions of GST Act must intimate the concerned tax authorities to opt for the composition levy in the Form GST CMP-01. This means that a concerned taxpayer can easily opt for the composition scheme by the following listed forms depending upon his status being a taxpayer –

1. Form GST CMP-01
2. The form GST CMP-02
3. Form GST REG-01

Furthermore, the taxpayers offering services can also apply for the composition scheme from the financial 2019 – 2020 onwards. This happened because as per the 32nd GST Council Meeting, the said composition scheme has now been made available for the service providers as well.

Finally, the Central Bureau of Indirect Taxes and Customs has issued an advisory for the GST composition scheme option by filing form GST-CMP-02.

All the eligible and qualified registered taxpayers can opt for the GST Composition Scheme for the Financial Year 2020-2021. As the taxpayers are just required to file the GST form, CMP 02 and the same will be effective from 1st April 2020. Further, it is significant to note that the taxpayers who are already registered in the composition scheme in the previous financial year are not obligated to opt-in for the composition scheme again for the Financial Year 2020-2021.

The registered taxpayers with an average annual domestic PAN-based turnover lesser than the actual required from the department can opt for the composition scheme.

Let us check out in detail

1. A Normal taxpayer with Rs 1.5 crore

2. Eligible registered taxpayers from the following listed states with the turnover of Rs 75 lakhs –

• Arunachal Pradesh
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura
• Uttarakhand

3. A Taxpayer working on only with the mixed or services with a turnover of Rs 50 lakh

The following listed taxpayers cannot opt-in for the composition scheme -

1. The supply of certain goods under the GST Act
2. Inter-State outward supplies of the goods
3. Electronic Commerce Operators said to cover the taxes mentioned under section 52 supplies
4. Manufacturer of the good such as the Ice cream and other edible ice, whether or not it contains cocoa in it
5. A Casual Dealer
6. A Non-Resident (NRI) Foreign Taxpayer
7. A person registered as the Input Service Distributor (ISD) or as a person registered as the TDS (Tax Deducted at Source) Deductor or the Tax Collector

All the registered taxpayer under the composition scheme are needed to file the stock intimation details and particulars at the website link provided, i.e., – https://tutorial.gst.gov.in/userguide/compositionpoc/index.htm?key=toc4&ref=

The registered taxpayer under the composition is needed to file the Form GST CMP 08 on a quarterly basis on the website link provided, i.e., – https://tutorial.gst.gov.in/userguide/returns/index.htm#t=Manual_CMP02.htm

Following listed are the steps to apply for the composition scheme after the login for the registered taxpayer:

1. Log in at the taxpayer’s interface

2. Now click on the Services > Registration > Application for opting the composition scheme

Now fill the provided form as needed by the rules and submit it For further details visit – link https://tutorial.gst.gov.in/userguide/compositionpoc/index.htm?key=toc1&ref=

GST Portal

Step 1 - Login to the official GST Portal - Visit the official GST (Goods and Service Tax) portal gst.gov.in. Now, on the home page, the taxpayer is required to enter his or her log in credentials to log in into the GST portal.

Step 2 - Go to ‘Services’ > ‘Registration’ > ‘Application to choose for composition scheme’ - Once the taxpayer has logged into the GST portal using his or her login credentials, then in the next step he or she is required to select the ‘services tab’ and then the ‘registration menu’ from the dropdown list. After selecting the ‘registration menu’ now choose the ‘application to opt for the composition scheme’ from the prearranged list of options

Once the taxpayer has selected the option named ‘application to opt for the composition scheme’, he or she will be directed towards the ‘application to opt for the composition scheme’ page. Further, this concerned page will display his or her GSTIN (Goods and Service Tax Identification Number), legal name of the business, trade name (if in case any) and the address proof of the principal or the registered place of business.

Now, below listed all the details deals with the nature of the taxpayer’s business along with its jurisdiction. Further, following filing these details, then in next step a composition declaration checkbox is placed.

The taxpayer is required to check this box as it is basically a declaration stating that the taxpayer shall abide by all the conditions and restrictions set prescribed for the taxpayers who have opted for the composition scheme under the GST Act and the rules thereunder.

But it is significant to note that after submitting the concerned form, the taxpayer must also check the box for the verification that is placed right under the composition declaration.

Further, the verification box is basically a declaration stating that all the information provided by the concerned person as a taxpayer is correct and accurate, and moreover, stating that nothing has been hidden from the concerned tax authorities.

Step 4 – Select Authorised Signatory – If in case the dealer concerned is a Company or an LLP (Limited Liability Partnership), then the application could be submitted by the concerned company or LLP only with the DSC (Digital Signature Certificate). Further, other registrants other than a Company or an LLP can use any of these three methods in order to submit the concerned return.

Step 5 – Choose the option in order to SUBMIT the form – Once the taxpayer has selected the authorized signatory and has entered the place, then the option saying submit the form gets activated. The concerned taxpayer can now submit the form either by way of Digital Signature Certificate (DSC), E-Sign and EVC.

Now, the taxpayer is required to select the requisite option and then click on the corresponding submission button.

Step 6 – Display of Warning – Once, the taxpayer has selected the option saying submit the form, a pop up for the warning will open. Here, the taxpayer is required to click on the ‘PROCEED’.

Step 7 – Display of Success Message - Following the above-mentioned procedure, the concerned form gets submitted, and once the said application is duly submitted a success message is displayed on the screen. Following this step, an acknowledgement is sent on the registered email id and mobile number of the concerned dealers.

Further, after getting the said application filed, a Composition Dealer is required to file a Form GST CMP-03 within a period of 90 days.

See rule 3(3) and the 3(3A)}

Intimation to pay the tax mentioned under section 10 (composition levy)

(For the persons registered under the said Act)

The Central Board of Indirect Taxes and Customs (CBIC) has released an advisory regarding the filing of the Form GST CMP-02 for Opting-in the Composition Scheme for the Financial Year 2020- 2021 for benefiting the small businesses, by making the GST filing comparatively easier and more cost-effective for them. Further, the small businesses opting in for the Composition Scheme are required to pay GST at a fixed rate of their annual turnover and are also required to file their GST returns on a quarterly basis. Furthermore, normally the taxpayer having the annual turnover more than Rs 1.5 crore can register itself under the Composition Scheme. Also, the said limit is reduced to Rs 75 Lakhs for eight states. Lastly, this scheme also provides the business or the taxpayer who cannot get registered themselves under the composition scheme.