Guidance on Opting-in for Composition Scheme for 2020-21


The Government has issued an advisory on 7th April 2020 for the person registered under Composition Scheme or who is registered under the Normal scheme but wants to opt Composition scheme for Financial Year 2020-21. The government has extended dates for opting for composition scheme by normal taxpayers, for the financial year 2020-21. These are notified in Notification No. 30/2020 – Central Tax.

The major takeaways from the Advisory issued dated 7th April 2020 & Notification No. 30/2020 – Central Tax.  by the Government are as follows:-

  • Normal and registered taxpayers who want to opt-in for Composition in FY 2020-21 can apply in Form GST CMP-02 by 30th June 2020.
  • The normal taxpayers i.e person registered under the normal scheme should not file any GSTR-1/GSTR-3B for any tax period of the Financial year 2020-21 using the GSTN associated with the same PAN, otherwise, they won't be able to opt for Composition Scheme for the financial year 2020-21.
  • The taxpayers who are already in the composition scheme, in the previous financial year are not required to opt-in for composition again for Financial Year 2020-21.
  • To reverse ITC for the stock in hand at the time of transition can be filed till 31st July 2020 in form GST ITC-03.
Return/Payment of taxes during this lock-down for Composition Scheme:-
  • All taxpayers opting in for composition shall file FORM GST CMP-08 quarterly and pay GST and shall file GSTR-4 annually.
  • Due to the Global pandemic COVID-19, the Government has extended due dates for Composition Scheme vide Notification No. 34/2020 – Central Tax.
  • The due date for furnishing Form GST CMP-08 for the quarter ending March 2020 is 7th July 2020.
  • The due date for filing of return in Form GSTR-4 for the financial year 2019-20 is 15th July 2020.
The taxpayers, who are not eligible for opting in Composition Scheme:-
  • Suppliers of the goods/services who are not liable to be taxed under GST,
  • Inter-State outward suppliers of goods/services,
  • The taxpayers supplying through e-commerce operators, who are required to collect tax under section 52,
  • The manufacturers of notified goods like (i) Ice cream and other edible ice, whether or not containing cocoa, (ii) All goods, i.e. Tobacco and manufactured tobacco substitutes and (iii) Pan Masala, (iv) Aerated water
  • A Casual taxpayer,
  • A Non-Resident Foreign Taxpayer,
  • A person registered as Input Service Distributor (ISD),
  • A person registered as TDS Deductor /Tax Collector,
The taxpayers, who are eligible for opting in Composition Scheme:-
  • The normal taxpayers having aggregate turnover (at PAN level) below Rs. 1.5 Crore in the previous financial year, who doesn’t want to avail ITC facility,
  • The normal taxpayers having aggregate turnover (at PAN level) below Rs. 75 lakh in the previous financial year who are situated in the following states:
    1. Arunachal Pradesh,
    2. Manipur,
    3. Meghalaya,
    4. Mizoram,
    5. Nagaland,
    6. Sikkim,
    7. Tripura and
    8. Uttarakhand:
  • The normal taxpayers supplying services and/or mixed supplies having aggregate turnover of last financial year below Rs. 50 lakhs.
Procedural Aspects to opt-in Composition Scheme:-
  • The application for opting-in composition scheme for the financial year, 2020-21 has been made available on GST Portal.
  • The eligible registered taxpayers, who want to opt-in for composition scheme for the Financial Year 2020-2021, may file FORM GST CMP-02 application.
  • The taxpayers should navigate as follows:
    • Log-in> Services > Registration > Application to opt for Composition Levy > filing form GST CMP-02 > file application under DSC/EVC.
  • Once CMP-02 application is filed, the composition scheme shall be available to the taxpayer w.e.f. 1st April 2020.
  • The taxpayers who were a regular taxpayers in previous financial year but are opting-in composition scheme for 2020-21 should file ITC-03 for reversal of ITC credit on stocks of Inputs, semi-finished goods and finished goods available with him.
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[Disclaimer:-This article is being furnished for informational purposes only. We make every effort to use reliable & comprehensive information, but we do not represent that the contents of the article are accurate or complete.]

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