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A Guide to Withdrawing from the GST Composition Scheme via CMP-04

This article outlines the process for a GST Composition Scheme dealer to withdraw from the scheme by filing Form GST CMP-04. It details the specific situations requiring this form, such as voluntary exit or exceeding turnover limits. Furthermore, it provides a clear, step-by-step guide on how to complete the CMP-04 filing online through the official GST Portal.

📖 2 min read read🏷️ GST Composition Scheme

Businesses operating under the Goods and Services Tax (GST) composition scheme are required to submit Form GST CMP-04 when they choose to exit the scheme. This form must be filed under three specific circumstances: * When a dealer voluntarily decides to withdraw from the composition scheme. * If the dealer's annual turnover surpasses the prescribed limits. * If the dealer no longer meets any of the essential conditions for participating in the scheme. According to a notification issued on January 1, 2018, the term 'turnover' for traders refers to the total value of taxable goods supplied. Taxpayers must submit GST CMP-04 electronically via the GST Portal within seven days from either the date they intend to opt out of the composition scheme or the date they become ineligible. For instance, if a composition dealer's turnover exceeds ₹1.5 crore on December 15, 2017, they must file CMP-04 by December 22, 2017. The withdrawal process is completed online through the official GST Portal.

Step-by-Step Guide for Filing GST CMP-04 Online

To file GST CMP-04 on the official GST Portal, follow these instructions:

  1. Access the GST Portal by logging in with your credentials.
  2. Navigate to 'Services,' then 'Registration,' and finally select 'Application for Withdrawal from Composition Levy.'
  3. From the provided drop-down menu, choose the specific reason for your withdrawal.
  4. Tick the 'Verification' checkbox, provide the 'Name of Authorized Signatory,' and fill in the 'Place' field. After clicking 'SAVE,' submit your CMP-04 application using either a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Once the GST CMP-04 is successfully filed, your 'Taxpayer Type' in 'My Profile' will be updated to 'Regular.'

Frequently Asked Questions

What is the GST Composition Scheme?
The GST Composition Scheme is a simplified tax scheme for small taxpayers in India, allowing them to pay GST at a fixed turnover rate instead of the regular GST rates. This scheme reduces compliance burden for eligible businesses.
Who is eligible for the GST Composition Scheme?
Businesses with an annual turnover up to a certain limit (currently ₹1.5 crore for most states and ₹75 lakhs for special category states) are generally eligible. Service providers can also opt for a similar scheme with a lower turnover threshold.
What are the benefits of the Composition Scheme?
Key benefits include reduced compliance, fewer returns to file, and lower tax liability. Businesses under this scheme do not need to maintain detailed records or issue tax invoices.
Can a business opt out of the Composition Scheme at any time?
Yes, a business can voluntarily opt out of the Composition Scheme at any time by filing Form GST CMP-04. They must also switch to the regular GST scheme if their turnover exceeds the prescribed limits or they fail to meet other eligibility conditions.
What happens after filing GST CMP-04?
After successfully filing GST CMP-04, the taxpayer's status on the GST Portal changes from 'Composition' to 'Regular.' This means they will then be subject to the standard GST compliance requirements, including regular return filings and maintaining detailed tax records.