GST
Voluntarily leaving the composition scheme
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Facts
You can withdraw from composition at any time by filing CMP-04 on the portal. You then become a regular taxpayer and can claim ITC on stock held on the day before withdrawal through ITC-01.
Provisions and law
- Rule 6, CGST Rules 2017Validity of composition, withdrawal in CMP-04, intimation within 7 days on losing eligibility, and CMP-05 to CMP-07 for denial
- Sec 18(1)(c), CGST Act 2017ITC on stock held when leaving composition
Analysis
Example: a trader gets a large factory order needing tax invoices and withdraws from 1 September. File CMP-04 before that date, start tax invoices from 1 September and claim ITC on stock worth Rs 6 lakh with Rs 1.08 lakh GST in ITC-01. Remember that if you withdraw mid-year, you cannot come back until the next financial year.
Conclusion
- Choose the withdrawal date
- File CMP-04 on the portal
- Take a stock count for ITC-01
- Claim ITC within 30 days
- Start regular returns
A Savvy can do this for you
Opting into composition, CMP-02
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