31 May 2026 GST Alert: One Mistake Could Cost You 18% Tax Instead of 1%



Business who have switched from the Normal GST Scheme for FY 2025–26 to the Composition Scheme for FY 2026-27 must complete ITC reversal on closing stock and file Form ITC-03 within the prescribed compliance period. 

Composition rates for a dealer generally include:

  • 1% for traders/manufacturers 
  • 5% for certain restaurants
  • 6% under specific composition-like schemes for service providers
31 May 2026 GST Alert: One Mistake Could Cost You 18  Tax Instead of 1

Effective Deadline for ITC-03 Filing

  • Date of Composition Scheme: 1 April 2026
  • 60-Day Compliance Deadline: 31 May 2026
 

Failure to comply may result in cancellation of composition benefits and tax rate may increase from 1% to 18%.

Why ITC Reversal Is Required?

If a taxpayer already switched from the Regular GST Scheme to the Composition Scheme, then they cannot retain ITC on opening stock as any ITC previously claimed on goods remaining in stock on the date of switching must be reversed.

 

In short:

As per Section 18(4) of the CGST Act, the ITC related to the stock or capital goods lying with you as on 31 March 2026 must be reverse.

Missing Deadline

Filing ITC-03 after the prescribed period may still be technically possible, but the department could treat the taxpayer as ineligible for the Composition Scheme, leading to denial of composition benefits.


2621 Views Comment   Share GST   Report


About the Author

Student

Comments :

Related Articles


Loading


Popular Articles





CCI Pro

CCI Articles

submit article


Company
Featured 07 November 2026
Paid Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
10 November 2026
FP&A Executive

Gujarat Guardian

Ankleshwar

CA Final

View Details
Company
ARTICLESHIP 20 October 2026
CA ARTICLE

AMKN & CO

Noida

CA Inter

View Details
Company
Featured 29 October 2026
Accounts Executive

Synergy Keystone

Chennai

B.Com

View Details
Company
24 October 2026
CA Industrial Trainee

Fytomax Nutrition Private Limited

Aurangabad

CA Inter

View Details
Company
ARTICLESHIP 07 November 2026
Article Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details