Relaxation in Composition Scheme under GST Law granted due to Covid-19 Outbreak

Frah Saeed

Co-founder Clearmytax.in

1.0 Introduction

Due to COVID-19 outbreak the Government has given certain compliance relief to the tax payers. Such relief has also been granted in respect of Composition Scheme which is governed by Section 10 of the CGST Act,2017 and special composition scheme for service suppliers as mandated under Notification No. 2/2019-CT (R) dated 07-03-2019.

All the relaxations provided in the arena of Composition Scheme are discussed below:

2.0 Relaxation in filing of GST returns viz FORM GSTR-4 and FORM CMP-08

As per Section 62(1) of the CGST Act,2017 every registered person paying tax under section 10 or Notification No. 2/2019-CT (R) dated 07-03-2019 shall furnish a statement, every quarter, containing details of payment of self assessment tax in FORM GST CMP-08, till the 18^th day of the month succeeding the quarter.

Further under said section these tax payers are also required to furnish an annual return in FORM GSTR-4 till 13^th of April, following the end of the financial year. Now let us discuss whether any benefit in respect of date of filing of above returns have been accorded. For decoding the benefit we need to refer to Notification No. 21/2019-CT dated 23-4-2019 as recently amended vide Notification No.34/2020-CT dated 3-4-2020.

As per above amended Notification the quarterly statement in FORM CMP-08 for the quarter ending  31-3-2020 can be filed by 7-7-2020 instead of the normal due date of 18-4-2020. The benefit doesn’t end here as time has also been extended in regard to filing of the annual statement i.e. FORM GSTR-4. As per above referred amended Notification the FORM GSTR-4 return for year ending 31-3-2020 can be filed by 15-7-2020 instead of the normal due date of 13-4-2020.

For ready reference the extension in time limits are tabulated as under:-

2.1 Due date for making payment of tax for quarter ending March,2020 also extended

Needless to mention here that with extension of time in filing of quarterly return i.e. FORM CMP-08 the due date of making payment of tax has been extended consonantly in light of Rule 62(2) of the CGST Rules,2017. Accordingly payment of tax for the quarter ending 31-3-2020 can be made by tax payer on or before 7-7-2020 by debiting its electronic cash ledger while filing its quarterly return in FORM CMP-08.

 3.0 Filing of option to pay tax under Composition Scheme

As per Rule 3(3) of the CGST Rules,2017 any registered person opting for composition scheme shall file an intimation in FORM GST CMP-02, prior to the commencement of the financial year for which the option to pay tax under composition scheme is exercised. Further as per said sub-rule, such person shall also furnish the statement in FORM GST ITC-03 in regard to reversal of Input Tax Credit within 60 days from the commencement of relevant financial year.

In view of above provisions, if a registered person paying tax under Section 9 wants to migrate to Composition Scheme from FY 2020-21 he need to file GST CMP-02 on or before 31-03-2020 and also file FORM GST ITC-03 by 31-05-2020. However considering the Covid-19 outbreak these deadlines have been relaxed vide Notification No.30/2020-CT dated 3-4-2020 by which CGST (Fourth Amendment) Rules, 2020 are promulgated and inter-alia with effect from the 31st March, 2020, in rule 3(3), the following proviso is inserted, namely:-

“Provided that any registered person who opts to pay tax under section 10 for the financial year 2020-21 shall electronically file an intimation in FORM GST CMP-02, duly signed or verified through electronic verification code, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, on or before 30th day of June, 2020 and shall furnish the statement in FORM GST ITC-03 in accordance with the provisions of sub-rule (4) of rule 44 upto the 31st day of July, 2020.”.

Accordingly by insertion of proviso, deadlines for filing of FORM GST CMP-02 and FORM GST ITC-03 have been extended. For ready reference of the readers the extended deadlines are tabulated below:

4.0 Waiver from filing GST- CMP-08 and FORM GSTR-1 for 2019-20 in some cases

The Central Government vide Notification No. 12/2020- CT dated 21st March 2020 has inserted  proviso to para 2 of Notification No. 21/2019-CT dated 23-4-2019 whereby those registered persons who are paying tax under Section 10 or special composition scheme (basically for service suppliers) under notification No. 2/2019-CT(R) dated 07.03.2019 and have filed GSTR-3B in FY 2019-20 instead of GST CMP-08 , have been exempted from filing of FORM GSTR-1 and FORM GST CMP-08 for FY 2019-20.

For appreciating the amendment, the para 2 of Notification No. 21/2019-CT dated 23-4-2019 alongwith the proviso thereto as inserted by Notification No. 12/2020- CT dated 21-3-2020 are reproduced below:

2. The said persons shall furnish a statement, every quarter or, as the case may be, part thereof containing the details of payment of self-assessed tax in FORM GST CMP-08 of the CGST Rules,2017 till the 18th day of the month succeeding such quarter.

“Provided that the said persons who have, instead of furnishing the statement containing the details of payment of self-assessed tax in FORM GST CMP-08 have furnished a return in FORM GSTR-3B under the CGST Rules, 2017 (hereinafter referred to as the said rules) for the tax periods in the financial year 2019-20, such taxpayers shall not be required to furnish the statement in outward supply of goods or services or both in FORM GSTR-1 of the said rules or the statement containing the details of payment of self-assessed tax in FORM GST CMP-08 for all the tax periods in the financial year 2019-20.”

5.0 Advisory on Opting-in for Composition Scheme for 2020-21 – Extension of Dates in view of COVID-19 pandemic issued by GSTN on 07-04-2020

A. Due to COVID-19 pandemic and challenges faced by taxpayers, Government has extended dates for opting for composition scheme by normal taxpayers, for the financial year 2020-21. These are notified in Notifications 30/2020 Central Tax, dated 03.04.2020. Circular No. 136/06/2020-GST dated 3rd April, 2020 has also been issued.

B. Existing Normal taxpayers who want to opt for Composition Scheme in Financial Year 2020-21 may note following changes:

1. Revised date to file Form GST CMP 02: Normal and registered taxpayers who want to opt in for Composition in FY 2020-21 can apply in Form GST CMP-02 by 30th June 2020.
2. No GSTR 1 or 3B must be filed in 2020-21 financial year for associated PAN: The taxpayers SHOULD NOT file any GSTR-1/GSTR-3B, for any tax period of FY 2020-21, from any of the GSTIN on the associated PAN, or else they will not be able to opt for composition scheme for FY 2020-21.
3. No need for re-opting for the composition scheme: The taxpayers who are already in composition scheme, in previous financial year are not required to opt in for composition again for FY 2020-2021.
4. Revised date to file Form GST ITC 03: Form GST ITC-03 to reverse ITC for the stock in hand at the time of transition can be filed till 31st July, 2020.
5. Modification in earlier advisory date 18.02.2020: The advisory issued on 18.02.2020 and available on GST Portal (https://www.gst.gov.in/newsandupdates/read/356) stands modified to above extent.

Frah Saeed

Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.