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:
- The ITC claimed on purchasable goods are for producing taxable supplies.
- The ITC claimed on the basis of the invoices/documents should be available.
- The date of the invoice should be within 12 months from the appointed date.
- Reduce the credit on capital goods by such percentage points as may be prescribed.
GST Portal – Steps to withdraw from Composition Scheme
- Login to GST Portal
Login to your account on GST Portal using valid username and password
- Navigate to Application for Withdrawal from Composition Scheme
Go to Services > Registration > Application for Withdrawal from Composition Scheme
- 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.
- Verification
Click on the verification check-box. Select Name of the Authorized Signatory, enter Place and click on Save.
- 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
- Click on “Submit with DSC” option. A Warning message will appear on the screen. Click on “Proceed” to move forward
- The emSigner window appears on the screen. Select the desired signature required for the application and click on Sign
Sign using EVC
- Click on the option Submit with EVC
- The system sends an e-mail and SMS to the registered e-mail address and mobile number with an OTP
- Enter the OTP
- Once the authentication is complete, you will receive a success message. The system will generate an ARN and send it to the registered e-mail and SMS in next 15 minutes
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.
FAQs
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.
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.
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