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Switching as Regular Dealer (Services) from Composition Dealer

Sanjay D Thakker (Chief Financial Advisor) (89 Points)

27 March 2023

Composition Dealer (Sevices) exceeds 50 Lakhs Turnover in March 2023.

- How to apply/switch for Regular?

- From when/which date he must raise Invoices instead of Bill of Supply?

- How to file the Return & pay tax (also why when) for the period till he was below 50 Lakhs?

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5 Replies

CA Rakesh Ishi (Working at Private Company) (7775 Points)
Replied 27 March 2023

Here are the steps you need to follow:

Submit an application for voluntary registration as a regular dealer for services on the GST portal. This application can be filed online using your GST login credentials.
Once the application is filed, you will be provided with a new GST registration number as a regular dealer for services.
You will need to cancel your existing composition dealer registration within 30 days from the date of obtaining the new registration number. You can do this by filing an application for cancellation of your existing registration on the GST portal.
You will need to pay any pending tax liability under the composition scheme before cancelling your registration.
You will also need to file all pending GST returns under the composition scheme before switching to the regular dealer for services.
Once you have cancelled your composition dealer registration, you can start invoicing and paying GST as a regular dealer for services using your new GST registration number.

Sanjay D Thakker (Chief Financial Advisor) (89 Points)
Replied 27 March 2023

Hi Rakesh,

Thanks a ton for the detailed reply. Truly appreciate!

2 Queries.

1. Within how many days max (of Turnover exceeding 50 lakhs) one has to apply for Regular Scheme?

2. Upon crossing 50 Lakhs, the very NEXT/FIRST Sales has to be Invoiced @ 18%? (in place of 6% BOS) Or is there any relaxation/guidelines? Asking because there will be practical issues like New Application, Old Cancellation, filing CMP08, within same period (March 2023) Sales getting billed at 2 different rates (6% & 12%) etc.

Best Regards,

CA Rakesh Ishi (Working at Private Company) (7775 Points)
Replied 27 March 2023

1. If a person registered under the Composition Scheme crosses the turnover limit of Rs. 50 lakhs, they must apply for the Regular Scheme within 30 days from the date of such crossing.

2. As per Section 10(3) of the Central Goods and Services Tax Act, 2017, the registered person shall be liable to pay tax as a regular taxpayer from the day immediately following the day when such turnover crosses the threshold limit.

Therefore, it is advisable to apply for the Regular Scheme as soon as possible, preferably within the 30-day period, to avoid any penalties or interest for delay in payment of taxes.

Sanjay D Thakker (Chief Financial Advisor) (89 Points)
Replied 27 March 2023

As regards Point # 1 of your first reply.... Do you mean, on the Portal under the Services/Registration Tab, choosing the option Intimation/Application for Withdrawal from Composition Levy and Reason for withdrawal from composition levy as Voluntary?

a NEW/FRESH voluntary application altogether?..... (Is this second option allowed?)

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 27 March 2023

Dear Sanjay

As per Rule 6 of CGST Act ', the composition dealer can remain under composition scheme as long as he satisfy all the conditions mentioned in Section 10.
So the day you ceases to satisfy any condition ie in your case threshold limit exceed 50 lac thereafter the next supply need to be pay tax under Section 9(1) (as regular taxpayer) & shall also file an intimation for withdrawal from the scheme in Form GST CMP-04 within 7 days.

So .
1. After crossing the limit 50 lac your next supply need be charged as regular taxpayer.
2. File CMP-04 for withdrawal from composition scheme.