Circular No.: 97/16/2019-GST
Date of Circular: 5th April 2019
Relevant Sections and Rules:
- Section 10, CGST Act, 2017 – Composition levy
- Section 168(1), CGST Act, 2017 – Power to issue instructions
- Rule 3(3), CGST Rules, 2017 – Intimation for opting into composition scheme
- Rule 3(3), CGST Rules, 2017 – Statement in ITC-03
- Notification No. 2/2019-CT(R) dated 07.03.2019 (amended by Notification No. 9/2019-CT(R) dated 29.03.2019)
Clarification on Exercise of Option to Pay Tax Under Notification No. 2/2019-CT(R)
- Background:
Notification No. 2/2019-CT(R) provides a 3% central tax rate (6% combined) on first supplies up to ₹50 lakh by registered persons whose preceding year turnover was ₹50 lakh or less. This circular clarifies procedural aspects for opting into this composition-like scheme introduced w.e.f. 01.04.2019. - Clarifications Issued:
- (i) Existing Registered Persons:
➤ Must file FORM GST CMP-02 by selecting “Any other supplier eligible for composition levy” [Sl. No. 5(iii)]
➤ Must also file FORM GST ITC-03 as per Rule 3(3) to reverse ITC.
➤ Deadline for both: 30th April 2019 - (ii) New Registrants:
➤ Eligible new taxpayers can opt for this scheme at the time of registration itself by indicating this choice at Sl. No. 5 and 6.1(iii) of FORM GST REG-01 - (iii) PAN-Level Applicability:
➤ Option exercised for any place of business under a PAN shall apply to all registrations under that PAN across India. - (iv) Effective Date of Option:
➤ Becomes effective from the start of financial year for existing taxpayers or date of registration for new taxpayers.
- Rule Applicability:
Chapter II of the CGST Rules (Composition Rules) shall mutatis mutandis apply, except as specifically modified in the circular.
This circular ensures a clear procedure for opting into the 6% concessional tax scheme for small service providers under Notification 2/2019-CT(R), aligning compliance with the existing composition levy framework.
Source: Circular No.: 97/16/2019-GST
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