GST
Composition starts only from a new financial year
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Facts
An existing regular taxpayer can opt for composition only from the start of a financial year by filing CMP-02 before it. A mid-year switch into composition is not allowed. New registrants can choose it at registration.
Provisions and law
- Rule 3, CGST Rules 2017Intimation to opt in CMP-02 before the start of the financial year; ITC-03 within 60 days for ITC on stock
- Sec 10(1), CGST Act 2017Eligible registered persons with aggregate turnover up to Rs 1.5 crore in the preceding year may opt to pay tax at composition rates
Analysis
Example: a shop registered as regular in 2025 wants composition from August 2026. It must wait until 1 April 2027 and file CMP-02 by 31 March 2027. Meanwhile it stays regular, files GSTR-1 and GSTR-3B and can take ITC. Use the time to clean up records so the ITC-03 reversal is easy.
Conclusion
- Note that a mid-year switch into composition is not possible
- Continue regular compliance until 31 March
- Plan CMP-02 for the next year
- Prepare stock records for ITC-03
A Savvy can do this for you
Opting into composition, CMP-02
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