Intimation for Composition Levy Under GST – Rule 3

The Goods and Services Tax (GST) framework in India provides businesses with an option to pay tax under the Composition Scheme as per Section 10 of the CGST Act, 2017. Rule 3 of the GST Rules outlines the process for opting for the Composition Levy, ensuring compliance with the necessary procedural requirements. This article delves into the key provisions of Rule 3 and its implications for taxpayers.

1. Filing Intimation for Composition Levy

For Provisional Registrants (Rule 24)

Any person who has received provisional registration under Rule 24(1)(b) and opts to pay tax under Section 10 must file an intimation in FORM GST CMP-01. This must be done electronically through the common portal, either directly or via a Facilitation Centre, within 30 days from the appointed day or within an extended period as allowed by the Commissioner.

Key Conditions:

If FORM GST CMP-01 is filed after the appointed day, the taxpayer cannot collect tax from customers but must issue a bill of supply instead.

For New Registrants (Rule 8)

A person applying for registration under Rule 8(1) can opt for the Composition Scheme by selecting the option in Part B of FORM GST REG-01. This serves as an intimation to pay tax under Section 10.

2. Annual Intimation Requirement

Any registered person opting for the Composition Levy must electronically file an intimation in FORM GST CMP-02 before the commencement of the financial year. Additionally, they must furnish FORM GST ITC-03 within 60 days of the start of the relevant financial year to declare the input tax credit reversal.

Special Provision for FY 2020-21:

• The due date for filing FORM GST CMP-02 was June 30, 2020.

• The due date for furnishing FORM GST ITC-03 was July 31, 2020.

3. Special Cases and Extended Deadlines

Rule 3A: Additional Provisions for Composition Levy

Notwithstanding the provisions in sub-rules (1), (2), and (3), a person with provisional registration (under Rule 24) or a valid registration (under Rule 10(1)) may opt for the Composition Levy from the 1st of the month following the month in which FORM GST CMP-02 is filed. The deadline for filing this intimation was March 31, 2018.

Additionally, such taxpayers must furnish FORM GST ITC-03 within 180 days from the date of commencing tax payment under Section 10.

Important Note: Once FORM GST ITC-03 is filed, the taxpayer cannot file FORM GST TRAN-1 for carrying forward any input tax credit.

4. Stock Declaration Requirement

Any taxpayer opting for the Composition Levy must submit a stock declaration in FORM GST CMP-03. This should include details of inward supplies from unregistered persons and must be filed electronically within 90 days of opting for the scheme or within an extended period allowed by the Commissioner.

5. State-Wide Applicability of Intimation

Once a taxpayer files an intimation for the Composition Scheme under sub-rules (1), (3), or (3A) for any place of business, it is deemed applicable to all other business locations under the same Permanent Account Number (PAN).

Conclusion

Understanding and complying with Rule 3 of the GST Rules is crucial for businesses opting for the Composition Levy. Timely filing of necessary forms such as GST CMP-01, GST CMP-02, GST CMP-03, and GST ITC-03 ensures compliance and smooth operations under the GST framework. Taxpayers must stay updated with any extensions or amendments provided by the Commissioner to avoid penalties and ensure hassle-free tax filing.