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New and Mandatory Return Filing for Composition Dealers

CA Chanchal Jain 
on 27 July 2020

LinkedIn


Composition Levy

Composition dealer is a taxpayer who is given relaxation from maintaining, reconciling, recording of output and input tax. In other words, he is the one who could not pass on the tax burden to the ultimate consumers. To reduce the compliance cost and compliance burden, the Government has categorically put such taxpayers under composition levy.

A composition dealer is a person who runs the business with limitations such as:

  1. No movement of goods outside the state in which the business is registered.
  2. No claim for Input Tax Credit on purchases.
  3. No tax invoice can be issued, i.e. no tax collection from consumers.

Compliance for Composition Dealer

  1. A business with a turnover of rupees 1.5 crores or less can opt to be a composition dealer. The threshold limit of aggregate turnover was increased from 1 crore to 1.5 crores via notification no. 14/2019-Central Tax, dt.07-03-2019.
  2. A composition dealer must file GST CMP-08 Quarterly Return from 01-04-2019 onwards.
  3. A composition dealer must discharge its liability in cash as he is not eligible to take input tax credit.
  4. The table below explains the compliance to be followed by composition dealer:
New and Mandatory Return Filing for Composition Dealers

Basis

On or before 31 March 2019

After 31 March 2019

Filing Return

The taxpayers registered under section 10 were required to file the following return:

  • GSTR-4 Quarterly Return

The taxpayers are now required to file the following returns:

  • CMP-08 Quarterly Return
  • GSTR-4 Annual Return (which was made available on the GST portal since 21 July 2020)

Conditions

No conditions but filing of quarterly return was mandatory.

  • The taxpayer needs to file all the applicable returns if it has opted for the composition scheme in the relevant financial year even for
    one day.
  • All applicable CMP-08 Quarterly Returns must be filed before filing GSTR-4 Annual Return.

Steps to follow for filing GST CMP-08 Quarterly Return

  1. After logging into the GST portal, select the applicable Financial Year and Return Filing Period.
  2. In the box titled ‘Statement for payment of self-assessed tax GST CMP-08', click the PREPARE ONLINE button.
  3. Fill in the required details in the given columns, such as outward supplies (including exempt income), inward supplies attracting reverse charge, tax payable and interest payable.
  4. Then preview the filled GST CMP-08 before clicking the Proceed to file button.

Steps to follow for filing GSTR-4 Annual Return (For FY 2019-20 Onwards)

  1. Log into the GST portal using user id and password.
  2. From the Services tab, click Return and select Annual Return.
  3. On the File Annual Returns page, choose the applicable financial year and click SEARCH.
  4. The Annual Return GSTR-4 box will appear. Click the PREPARE ONLINE button.
  5. The GSTR-4 Annual Return page will appear. Enter aggregate turnover of previous financial year and click SAVE.
  6. Select the File NIL GSTR-4 checkbox, if haven't made any outward supply, haven't received any goods/services, filed CMP-08 as nil, and there is no other liability to report.
  7. Otherwise, enter details, such as:
  • Inward supplies from registered supplier (other than reverse charge)
  • Inward supplies from the registered supplier (reverse charge)
  • Inward supplies from an unregistered supplier
  • Import of Service
  • Tax rate wise inward and outward supplies
  1. Then preview the filled GSTR-4 before clicking the Proceed to file button.

Conclusion:

To overcome the confusion between GSTR-4, that is before 01-04-2019 it was compliance to be made by taxpayer quarterly registered under composition levy, i.e. u/s 10 of CGST Act.

With effect from 01 April 2019, all composition dealers are required to file CMP-08 Quarterly Return and Form GSTR-4 Annual Return for each financial year.

The above article is written by CA Chanchal Jain and could be reached at chanchaljain2007@gmail.com or ca.jain18@gmail.com.

Disclaimer: The above article is meant for informational purposes only and does not purport to be advice or opinion, legal or otherwise, whatsoever. While due care has been taken during the compilation of this article to ensure that the information is accurate to the best of our knowledge and belief, the contents of such articles do not substitute for professional advice that may be required. The individual expressly disclaims all and any liability to any person who has read this document or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this article.


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