The composition scheme was created specifically for small taxpayers to help them avoid the complexities of the GST and compliance framework. Small registered taxpayers should pay a flat rate of tax based on their annual income.

For the financial year 2021-22, the Goods and Services Tax Network (GSTN) has released an advisor on selection into the Composition Scheme.

1. How to register for the Composition Scheme:
  • Eligible registered taxpayers wishing to participate in the composition scheme for the financial year 2021-22 must submit a GST FORM application CMP-02 on or before March 31, 2021, after logging in to the GST portal. Taxpayers will use the following navigation:

    Log-in>Services > Registration > Application to opt for Composition Levy>Filing form GST CMP-02>File application under DSC/EVC

  • The composition scheme will be available to taxpayers beginning April 1, 2021, after filing Form GST CMP-02.
  • Taxpayers who have opted for the scheme are not obliged to repeat the previous composition for the financial year 2021-2022.


2. Who is eligible to participate in the Composition Scheme: – Thereafter, this scheme is available to ordinary taxpayers who do not wish to avail of the CIT:
  • Aggregate turnover of the previous fiscal year (at PAN level) as high as Rs. 1.5 crore
  • Companies registered in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand with an aggregated turnover (at PAN level) as high as Rs. 75 lakh in the previous fiscal year.
  • Provide turnover up to RS for mixed services and/or supplies. 50 lakh in the previous fiscal year.
  • Regular taxpayers opting for the composition scheme for FY 2021-22 must file Form GST ITC-03 to reverse ITC on input stocks, semi-finished goods, and finished goods available with them within 60 days of the effective selection date.

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MAJOR CHANGES in GST RULES: Effective from 01st Jan 2021 

3. Who is not eligible to participate in the composition scheme:
  • Suppliers of goods and services who are not required to pay GST
  • Inter-State exporters of goods and services
  • Taxpayers are obliged to collect tax under Section 52 and supply products through e-commerce operators.
  • Producers of notified products such as ice cream and other edible ice, whether or not cocoa, tobacco and manufactured tobacco substitutes, Pan Masala or aerated water.