Answer

1. F

   Facts

   When you move from regular to composition, you must pay back ITC on inputs in stock, semi-finished and finished goods and capital goods held on the day before composition starts. This is reported in ITC-03 within 60 days.

2. P

   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 18(4), CGST Act 2017On switching to composition, ITC on stock and capital goods must be paid back
3. A

   Analysis

   Example: on 31 March you hold stock worth Rs 8 lakh on which you took Rs 1.44 lakh ITC. File ITC-03 by end May and pay Rs 1.44 lakh from the credit ledger balance, or in cash if the ledger is short. Any leftover credit in the ledger then lapses. For capital goods, the reversal is reduced by 5 percentage points per quarter of use.

4. C

   Conclusion

   1. 1Take a stock count as on 31 March
   2. 2Compute ITC taken on stock and capital goods
   3. 3File ITC-03 within 60 days
   4. 4Pay the amount from the credit or cash ledger

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.