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Voluntary Withdrawal from GST Composition Scheme: A Comprehensive Guide to Filing CMP-04

This article outlines the process for Goods and Services Tax (GST) registered businesses to withdraw from the Composition Scheme by filing Form GST CMP-04. It explains the various reasons for withdrawal, including voluntary exit, exceeding turnover limits, or failing to meet scheme conditions. The guide provides a clear, step-by-step procedure for submitting the CMP-04 application online via the official GST Portal, ensuring taxpayers understand their obligations and the subsequent change in their registration status.

📖 2 min read read🏷️ GST Composition Scheme

Businesses registered under the Goods and Services Tax (GST) Composition Scheme must submit Form GST CMP-04 if they wish to withdraw from this scheme. This withdrawal might occur voluntarily or due to specific conditions no longer being met.

A dealer needs to file GST CMP-04 in these scenarios:

  • A voluntary decision to exit the Composition Scheme.
  • When their annual turnover surpasses the prescribed limits.
  • Non-compliance with any of the eligibility criteria for the Composition Scheme.

According to a notification from January 1, 2018, for traders, turnover refers specifically to the 'turnover of taxable supplies of goods'. The GST CMP-04 form must be filed within seven days from the date a taxpayer decides to opt out of the Composition Scheme or becomes ineligible for it. For instance, if a dealer's turnover exceeds ₹1.5 crore on December 15, 2017, they must file CMP-04 by December 22, 2017. This application is submitted electronically via the GST Portal.

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Step-by-Step Procedure for Filing GST CMP-04 on the GST Portal

Follow these instructions to complete the GST CMP-04 filing process online:

  1. Access the GST Portal: Begin by logging into your account on the official GST Portal.
  2. Navigate to Withdrawal Application: From the main menu, select 'Services', then 'Registration', and finally, 'Application for Withdrawal from Composition Levy'.
  3. Specify Reason for Withdrawal: A dropdown menu will appear. Choose the appropriate reason for opting out of the Composition Scheme from the available options.
  4. Complete Verification and Submission:
    • Tick the 'Verification' checkbox.
    • Enter the 'Name of Authorized Signatory'.
    • Fill in the 'Place' field.
    • Click the 'SAVE' button.
    • Proceed to file your CMP-04 using either a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Upon successful submission of GST CMP-04, your 'Taxpayer Type' in 'My Profile' will automatically update to 'Regular'.

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Further Reading

Frequently Asked Questions

What is the GST Composition Scheme?
The GST Composition Scheme is an alternative tax regime for small taxpayers in India, allowing them to pay GST at a fixed, lower rate of their turnover, simplifying compliance by reducing the number of returns and maintaining fewer records.
Who is eligible to opt for the GST Composition Scheme?
Businesses with an annual aggregate turnover below a specified threshold (currently ₹1.5 crore for most states, and ₹75 lakh for special category states) are eligible, provided they meet certain conditions such as not engaging in inter-state supply, manufacturing specific goods, or supplying services (with some exceptions).
What are the disadvantages of being registered under the GST Composition Scheme?
Key disadvantages include the inability to claim Input Tax Credit (ITC), restrictions on inter-state outward supplies, prohibition from collecting tax from recipients, and limited scope for service providers.
How does a taxpayer calculate turnover for Composition Scheme eligibility?
Aggregate turnover for the Composition Scheme includes the value of all taxable supplies, exempt supplies, and export of goods or services made by a person having the same PAN, calculated on an all-India basis, excluding the value of inward supplies on which tax is payable on a reverse charge basis.
What are the implications after successfully filing GST CMP-04?
After successfully filing GST CMP-04, the taxpayer's status changes from a Composition Dealer to a Regular Taxpayer, requiring them to comply with the standard GST provisions, including filing regular GST returns (GSTR-1, GSTR-3B) and being eligible to claim Input Tax Credit.

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