Before going into the details of CMP-02, let us take a look at the definition of composition scheme. It is also a tax mechanism where a person has to pay a fixed tax on his annual turnover but he must be registered under GST Registration. The person has to pay a fixed tax rate of 1% to 6%. There is less paperwork and GST compliance under this scheme.
The government has recently notified on the common GST portal about the composition scheme for the financial year 2020-2021 by filing form CMP-02. The last date to fill this form has been extended to 30th June 2020. Once the form is submitted, the person will be enrolled under the scheme automatically.
The taxpayers who were already registered under the composition scheme in the financial year 2019-2020 need not to fill the form. The form is for newcomers.
The taxpayers who are shifting from the regular scheme to composition scheme have to submit the form before the starting of the financial year but due to COVID -19, the relief of filing the form till 30th June has been given to them this time . The people registered under the composition scheme have to file GST CMP-08 quarterly and pay the tax. They shall file GSTR-4 annually.
- The taxpayers having an annual turnover of less than 1.5 crore and don’t want to avail ITC.
- The Taxpayers having an annual turnover of less than 75 lakhs situated in the following states-Arunachal Pradesh, Sikkim, Manipur, Nagaland, Mizoram, Tripura, Uttarakhand, and Meghalaya.
- The normal taxpayers supplying their services or supplies having an annual turnover of below 50 lakhs for the previous financial year.
- People supplying non-taxable goods or services under GST Registration.
- People who are manufacturing Ice cream, edible ice whether or not containing cocoa, Tobacco, Pan Masala, and Aerated water.
- Input Service Distributor
- Tax Collector or TDS deductor
- A non-resident taxpayer of India
- Taxpayers operating through E-Commerce operators, who are responsible for tax collection under section 52.
- The suppliers of outward inter-state supplies or services.
Steps to file CMP-02
- Visit the website gst.gov.in
- Enter your User Id and Password.
- Enter the Captcha.
- Click on the tab ‘Services’. Then select the tab ‘Registration’.
- Click on the tab ‘Application to opt for composition scheme.’
- Fill in your basic information like GSTIN, Name of business, Trade Name (if any), Nature of business, your State, etc.
- Select the appropriate option from the 3 listed.
1st Option- It is a category of registered persons who are liable to pay a 1% tax.
II Option- It is a category of suppliers mentioned in schedule III. It means if you have a restaurant and you don’t serve alcohol then you lie in this category and are liable to pay a tax of 5%.
III Option- It is for those people who are traders or service providers having an annual turnover of less than 50 lakhs in the previous financial year. They are liable to pay a 6% tax.
- Click on the declaration box stating that you abide by the rules and restrictions of GST law.
- Click on the verification box stating that all the personal information filled above are true.
- Select the authorized signatory, designation, place, and date.
- If you have a DSC then you can click on the option ‘File with DSC’ or you can generate an OTP by clicking on ‘File with EVC’. An ARN number will be generated in 15 minutes.
The normal taxpayers also have to file ITC-03. Steps to file ITC are given below:
- Visit the website gst.gov.in
- Click on the tab ‘Services.’
- Select the option ‘Returns.’
- Click on the appropriate ITC form that is ITC-03.
- Fill your GSTIN, Legal Name, Trade name (if any).
- Fill a suitable table.
Table 5 (a) – It is for the inputs whose invoice is available with you. You have to fill the Unique Quantity Code, Quantity, and Value of input (the leftover amount by adjusting the credit or debit note.)
Table 5 (b) – It is for the semi-finished or finished goods whose invoice is available.
Table 5 (c) – It is for the capital goods whose invoice is available.
The value of the inputs can be estimated on the prevailing market price in case there is no invoice.
- Then fill the amount of payable and reverse ITC.
- Then click the verification tab and submit the form.
The ITC-03 form has to be submitted within 60 days of opting for the composition scheme or within the beginning of the financial year.
The reason behind the filing of the ITC-03 form is that once a taxpayer has opted for the composition scheme they cannot avail the input tax credit. You have to declare the leftover stock in ITC-03 form. The ITC claimed by you shall be reconciled using GSTR-2A. It is advisable to clear your leftover stock before 31st March 2020 because then you have to go for reversal or have to pay a tax on it.
Already registered taxpayer can opt for composition levy by logging into the Taxpayer interface at the website gst.gov.in
- Then click on services.
- Select the tab ‘Registration.’ Under it select the tab ‘Application to opt for Composition levy’ and fill the form for the same.