Quick Review
Can a Regular Dealer under GST opt for the Composition Scheme in the middle of the year?
Answer: No. As per Section 10 of the CGST Act, a regular dealer cannot opt for the composition scheme mid-year. The option can only be exercised at the beginning of the financial year, based on the turnover of the preceding financial year.
Checkpoint:
- After opting for the composition scheme, the dealer must file ITC-03 for the reversal of input tax credit prior to the appointed day, but not later than thirty days after the said day.
- Tax invoices cannot be issued once the option for the composition scheme is exercised.
- The dealer must make a declaration for the reversal of input tax credit/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock, and capital goods under sub-section (4) of Section 18.
Can a Composition Dealer under GST opt out of the Composition Scheme in the middle of the year?
Yes, a composition dealer can opt out of the scheme during the year if they wish to convert to a regular dealer and claim input tax credit. If a taxpayer exceeds the turnover limit as per Section 10 of the CGST Act, 2017, they must file ITC-01 within 30 days, providing a summary of the closing stock available in the books as of the date before opting out of the scheme.
Checkpoint:
- File monthly and quarterly returns, such as GSTR-1 and GSTR-3B, as applicable.
- Claim input tax credit based on the details reflected in GSTR-2B.
- Issue tax invoices.