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GST Portal : Withdraw from Composition Scheme

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Maharshi Shah

Composition Scheme
DSC
EVC
GST Portal
ITC
Last updated on April 19th, 2021

In order to opt-out of the Composition Scheme, the taxpayer has to file an intimation. File the intimation to withdraw from the composition scheme in the Form GST CMP-04 on GST Portal. The Taxpayer will also have to provide details of the stock of inputs, inputs contained in semi-finished and finished goods in form GST ITC-01. Further, submit details within a period of 30 days from the date of filing an intimation.

Effect on Input-Tax Credit (ITC) – withdraw from Composition Scheme

Once the taxpayer opts out of the Composition Scheme, they enter the regular scheme of taxation under GST. Furthermore, taxpayers are eligible to claim Input Tax Credit (ITC) on their purchases after opting-out. ITC is available subject to the following conditions:

  1. The ITC claimed on purchasable goods are for producing taxable supplies.
  2. The ITC claimed on the basis of the invoices/documents should be available.
  3. The date of the invoice should be within 12 months from the appointed date.
  4. Reduce the credit on capital goods by such percentage points as may be prescribed.

GST Portal – Steps to withdraw from Composition Scheme

  1. Login to GST Portal

    Login to your account on GST Portal using valid username and password

  2. Navigate to Application for Withdrawal from Composition Scheme

    Go to Services > Registration > Application for Withdrawal from Composition SchemeGST Portal - Withdraw from Composition Scheme - Navigate

  3. Application Page

    We move to the Intimation/Application for Withdrawal from Composition Levy page.
    * Date – Select appropriate date from calendar. The date for withdrawal from Composition Levy cannot be before the date on which Composition Levy was opted.
    * Reason – Select the reason for withdrawal from the drop-down list.GST Portal - Withdrawal from Composition Scheme - Application Page

  4. Verification

    Click on the verification check-box. Select Name of the Authorized Signatory, enter Place and click on Save.

  5. Submit Application

    You can submit the application either using EVC option or using DSC. DSC requires the emSigner software for the GST Portal.

Submit using DSC

GST Portal - Opt in / Opt out Composition Scheme - DSC Prompt Message
GST Portal - Opt in or Opt out Composition Scheme - Sign with DSC

Sign using EVC

Check Updated Status in Profile

Taxpayer can confirm the change by visiting profile on GST Portal. Go to the section ‘Taxpayer Type’. The status changes from ‘Composition’ to ‘Regular’. The taxpayer will now have access to all returns applicable to regular taxpayers.

GST Portal - Withdraw from Composition Scheme - updated status in profile

FAQs

Is a Composition Dealers allowed to avail Input Tax Credit?

No, the Composition dealer is not allowed to avail Input Tax Credit. A taxpayer who opts to pay tax under the composition scheme cannot take credit on his input supplies.

How is availed input tax credit (ITC) treated when one switch on to Composition Scheme from the normal scheme?

In such a case when a person switches on to the composition scheme from the normal scheme, he/ she becomes accountable to pay an amount equal to the credit of input tax in terms of inputs present in stock on the day instantly after the date of the switchover. The remaining balance of input tax credit in the credit ledger after payment of such amount will be treated inconsiderable.

Can I choose for Composition Scheme in one year and change it in the later year?

Yes, You are allowed to switch between the Composition Scheme and the normal scheme on the basis of your turnover. The same switchover can be declared on the GST Portal. However, this flip flop comes along with alterations in the way you issue invoices and file your returns

Got Questions? Ask Away!

  1. Hey @Shweta_Saini

    You can opt out of Composition Scheme from your account on GST Portal. Once the taxpayer type is updated to Regular in your profile, you can start filing GST Returns under the regular scheme. If you are facing any issues while making the withdrawal application, you can create a grievance on the GST Portal.

    Do let us know if you have any further queries.

  2. I want to be able to claim input tax credit for GST paid. Should I opt for the GST composition scheme or regular scheme?

  3. Hey @Joe_Fernandes

    If you wish you claim Input tax credit, you should opt for GST Regular Scheme.

    Read more about the difference here.