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FAQ on Composition Scheme of GST

1)  Who can opt for composition scheme of GST?

Small taxpayers whose turnover is less than Rs 1.5 crore per financial year can opt for composition scheme of GST payment. The limit is Rs 75 lakh for special category states.

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2)  Can a service provider opt for composition scheme of GST?

Service providers whose aggregate annual turnover is up to Rs 50 lakh can opt for the composition scheme to pay tax at a nominal rate. The scheme is applicable to supplier of services only and also to suppliers of goods and services.

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3)  What is the rate of GST under composition scheme?

The rate of GST under composition scheme is:

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A dealer registered under composition scheme should pay GST out of pocket. The dealer should not collect and pay the GST to the Government.

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5) Which GST return should a dealer registered under composition scheme file?

Every dealer registered under composition scheme should file a quarterly return in CMP-08. The due date to file the return is 18th of the month following the end of a quarter.

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6) Should a composition dealer maintain books of accounts?

A composition dealer may maintain books of accounts as required under any other law. However, detailed records are not required for the purpose of GST returns.

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7) What are the conditions for composition scheme of GST filing?

The conditions applicable for a dealer under composition scheme are:

1. 1. The composition dealer cannot carry out inter state supplies of goods and services and exports.
   2. No input credit is available for inputs/purchases.
   3. The composition dealer cannot supply non taxable goods such as alcohol. Also, the dealer cannot supply through an e-commerce portal.
   4. The taxpayer should not be a manufacturer of ice creams (with or without cocoa) and other edible ice, pan masala or tobacco and manufactured tobacco substitutes.
   5. The dealer should not be a non-resident taxable person or casual taxable person.

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8) Can I file a nil CMP-08 filing through an SMS?

A taxpayer registered under composition scheme can file nil CMP-08 through an SMS if:

1. 1. The taxpayer is up to date by filing all applicable statements for the earlier quarters.
   2. The taxpayer’s mobile number should be registered on the GST portal.
   3. The taxpayer has no outward supplies.
   4. The taxpayer has no liability under RCM (reverse charge).
   5. The taxpayer has no tax liability for the quarter.

The nil CMP-08 filing is by sending SMS – Nil(space)return type(space)GSTIN(space)return period to the number 14409. For example, October to December quarter of 2021, the SMS sis NIL C8 08AAAAA1111AZE 12 2021. In the next step, send the verification code to the same number. For example, if your verification code is 133445, you SMS, CNF C8 133445. The ARN would be sent to the same mobile number and also to the registered e-mail Id.

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The penalty for not filing CMP-08 is Rs 200 per day (Rs 100 CGST and Rs 100 SGST). The late fee is subject to a maximum of Rs 5,000.

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In case you do not file the composition return CMP-08 for two consecutive quarters, e-way bill gets blocked. The taxpayer should then file all the pending returns and apply in form GST EWB 05 to activate the e-way bill generation.

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