The GST Revocation for Composition Scheme enables individuals or companies to receive benefits without being liable to pay tax. This is so long as the benefit is subject to deduction at source and they do not have any tax liability. In this article, we will guide you through the process of registering for GST Revocation under the composition scheme, providing you with all the necessary information to determine your eligibility for the scheme.
If you are a registered taxpayer who wishes to withdraw from the GST composition scheme, you must file an intimation for withdrawal in FORM GST CMP-04. This must happen within seven days of any event that makes your business ineligible for the GST composition levy. The article will also cover the eligibility criteria, implications of withdrawal and necessary steps to take when withdrawing from the GST composition scheme.
By the end of this article, you will have a thorough understanding of the composition scheme and the process of withdrawing from it. By learning about the GST composition scheme and the process of withdrawing from it, you can make informed decisions about your business’s tax obligations.
What is GST?
GST, or Goods and Services Tax, is a consumption tax that was implemented in India on July 1, 2017. It is a comprehensive tax levied on the manufacture, sale and consumption of goods and services throughout the country. The GST Council, chaired by the Union Finance Minister and comprising all state finance ministers, is responsible for determining the rates of taxes. The Council also decides which goods and services are subject to GST.
The GST system is structured into four tax slabs of 5%, 12%, 18%, and 28%. The majority of states have opted for a uniform rate of 18%— with a few exceptions. This uniform tax system across all states is expected to reduce corruption and avoid double taxation, streamlining the tax filing process for businesses.
In addition, the implementation of GST is expected to boost India’s GDP and create a more efficient tax system. It is projected to increase revenue collection by simplifying the process of tax filing and reducing the burden of compliance for businesses.
Revocation for Composition Scheme Under GST
GST Composition schemes are a crucial component of the Goods and Services Tax (GST) in India, as they determine the amount of input tax credit that can be claimed on output. This credit is based on the percentage of value added to the final product. If a product has undergone 100% value addition, then 100% input tax credit can be claimed. On the other hand, if the value addition is only 50%, then only 50% input tax credit can be claimed.
The GST composition scheme also determines whether a good is subject to zero-rated GST, which means that no taxes are payable. This scheme allows taxpayers to claim back the GST paid on certain goods and services by submitting Form GST-1 to the relevant authority. The form must include details of all taxable items purchased or used during a specific financial year.
Revoking the Composition Scheme Under GST: What You Need to Know
To cancel the registration under the composition scheme of GST, businesses must follow the below steps:
- Visit the GST portal and select the option for cancellation of provisional registration.
- Fill in the reason for the cancellation of GST along with other required details related to GST and business.
- Sign off after filling in the necessary details.
- If the business has tax invoices, they must also file form GST REG-16.
- Once the revocation process is completed, the tax officer will confirm the cancellation. However, if a business fails to meet the eligibility criteria, the GST revocation under the GST composition scheme may be cancelled. It is important to note that if a person’s registration is cancelled, they must pay an amount based on the taxable product or stock they own, as per Section 29(5) of the CGST Act.
The GST cancellation process under the composition scheme can also be initiated by the tax officer if they find that the business is not eligible for the scheme or has violated the rules and regulations. In such cases, the business will receive a notice from the tax officer regarding the cancellation and will have to follow the same cancellation process as mentioned earlier.
Filing GST returns is an essential part of complying with GST regulations in India. The GST return is a document that contains details of a taxpayer’s income, purchases, and taxes paid, which must be filed periodically with the GST authorities. Under the GST Revocation for Composition Scheme, businesses opting for the composition scheme must file GST returns on a quarterly basis, instead of monthly.
The GST return for composition taxpayers is a simplified form that includes information on the total turnover, tax payable, and tax paid during the quarter. It is important for businesses to file their GST returns on time to avoid penalties and maintain compliance with GST regulations.
Qualification Requirements for GST Composition Scheme
To avail of the benefits of the composition scheme under GST, there are certain eligibility criteria that businesses must meet. Here are the key requirements to register for the GST composition scheme:
- The taxpayer’s annual turnover must be less than ₹1.5 Crore. However, for businesses operating in the North-Eastern states, the threshold is ₹75 Lakhs.
- The business must have a valid PAN card.
- Businesses engaged in the manufacturing of products such as ice cream, pan masala, or tobacco are not eligible for the composition scheme under GST.
- Interstate suppliers and businesses that use e-commerce operators to supply goods are not eligible for this scheme.
Advantages of Opting for Composition Schemes under GST
The Composition schemes under GST offer numerous benefits, especially to small and medium-scale industries (SSIs).
- The composition scheme under GST provides an excellent tax-saving opportunity for SSIs. The GST Revocation for Composition Scheme exempts them from paying taxes for any taxable supply they make.
- Taxpayers can claim input credit on the purchase or production of goods or services by using a composition scheme. This input credit will be available for 5 years from the date of payment till the expiry date.
- Under the composition scheme, taxpayers have lower compliance requirements. They are not required to maintain detailed records of their transactions, which reduces their compliance burden.
- The registration process for the composition scheme is simple and can be completed online. This makes it easy for SSIs to register and avail the benefits of the scheme.
GST is a crucial tax paid by taxpayers and businesses for funding public services. However, taxpayers can benefit from schemes such as the GST revocation under the composition scheme to avoid payment of GST. The eligibility criteria and benefits of availing composition schemes have been discussed in this article.