Yes, you can change your GST registration from regular to composition by filing Form GST CMP-02 on the GST Portal before the start of a new financial year. This option is generally available for businesses with an annual turnover up to ₹1.5 crore (or ₹75 lakh for special category states).
The difference between the Composition and Regular GST schemes lies in the tax rate and filing frequency. The Regular GST scheme requires higher compliance with monthly returns and higher tax rates. In contrast, the Composition GST scheme offers lower tax rates and quarterly returns but limits the input tax credit.
Yes, just like your original registration application, you need to digitally authenticate the application for Amendment of Registration before submitting it on the GST Portal using DSC, E-Sign or EVC as the case may be.
A registered person whose aggregate turnover in the preceding financial year did not exceed Rupees one crore fifty lakh (for goods) and Rupees fifty lakh (for services or mixed supply for goods and services), may opt to pay tax under composition scheme.
According to clause (119) of Section 2 of the Central Goods and Services Tax Act of 2017, the GST rate on a composite supply of works contract is 12% (6% CGST + 6% SGST).
Any taxpayer who is registered as normal tax payer under GST needs to file an application to opt for Composition Levy in Form GST-CMP-02 at GST Portal prior to the commencement of financial year for which the option to pay tax under the aforesaid section is exercised.
The tax liability for a composite supply is determined by the principal supply. The rate of tax applied is the rate applicable to the principal supply, even though the entire bundle may contain supplies subject to different tax rates.
You can know whether a taxpayer opted for a composition scheme or not using the GST search tool. Enter any GSTIN and check the 'Taxpayer Type' column in the results to know whether the taxpayer is a regular taxpayer or opted for the composition scheme.
The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.
Who is not eligible for composition under GST? Businesses engaged in inter-state supplies, making non-taxable supplies, or selling through e-commerce operators are generally not eligible for the composition scheme under GST.
To amend the information provided in the core fields during registration, you need to perform the following steps:
Generally speaking, changing a business's structure involves:
Yes, you can change the nature of your business as you build or grow your business.
You can use the GST Portal and decide to take part in the latest and updated FY 2025–2026 Composition Scheme for your SME. Remember that the deadline to opt for the composition scheme is March 31, 2025!
Limitations of GST Composition Levy Scheme:
These are: (a) No credit of Input Tax: Any taxpayer registered under Composition Levy scheme will not be eligible to take Credit of Input Tax paid on purchases. Also, the buyer of taxpayer's supplies will not get the credit of taxes paid by taxpayer.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
A taxpayer is required to file an application in order to withdraw or opt out of the GST Composition Scheme. The application must be filed in Form GST CMP-04 in order to withdraw from the GST composition Scheme.
The minimum turnover for mandatory GST registration is ₹20 lakhs (₹10 lakhs for special category states). For the composition scheme, the limit is ₹1.5 crore (₹75 lakhs for special category states).
Rule 5 – Conditions and restrictions for composition levy
(g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
To opt for the Composition Levy, perform the following steps on the GST portal:
1. Access the https://www.gst.gov.in/ URL. The GST Home page is displayed. Click the Services > Registration > Track Application Status option.
To opt for the Composition Levy on the GST Portal as an existing taxpayer, perform following steps:
In the case of a composite supply, the time of supply is determined by the principal supply's nature. The GST is payable at the time when the principal supply is made. For instance, if a laptop is sold with a warranty service, the time of supply would be the time when the laptop is delivered to the customer.
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act; (b) an agriculturist, to the extent of supply of produce out of cultivation of land.
The two or more supplies of goods or services or both which are naturally bundled in which the principal supply is exempt and others are taxable can be treated as a composite supply of the principal supply if such principal supply is not a non-taxable supply as per sub-section (78) of section 2 of the Central Goods and ...