The How to Withdraw from Composition Scheme in GST process is important for small taxpayers who no longer meet the eligibility criteria or wish to move to the regular GST scheme. Many businesses start under this scheme because of its reduced compliance, but as they grow, they may need to exit. Understanding the withdrawal process helps avoid penalties and ensures smooth compliance.
When Should You Withdraw from Composition Scheme in GST?
The withdrawal from Composition Scheme in GST can be either mandatory or voluntary.
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Mandatory Withdrawal:
If a taxpayer no longer qualifies under GST law, withdrawal becomes compulsory. For example:-
Turnover exceeds ₹1.5 crore (₹75 lakh in some states).
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Engaging in inter-state supplies.
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Supplying through e-commerce operators.
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Providing non-eligible services.
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Voluntary Withdrawal:
Even if the taxpayer is still eligible, they may choose to withdraw if the regular GST scheme suits them better.
Step-by-Step Process to Withdraw from Composition Scheme in GST
The following steps explain how to withdraw from Composition Scheme in GST:
| Step | Action | Portal Section |
|---|---|---|
| 1 | Log in to GST portal | www.gst.gov.in |
| 2 | Go to Services > Registration | GST Portal |
| 3 | Choose “Application for Withdrawal from Composition Levy” | Registration Tab |
| 4 | Fill in the required details and reason | Online Form |
| 5 | Submit the application with digital signature (DSC/EVC) | Confirmation Page |
Once approved, the taxpayer is shifted to the regular GST scheme from the chosen date.
Key Points to Remember During Withdrawal
To avoid compliance issues during withdrawal from Composition Scheme in GST, businesses must:
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File all pending GST returns under the scheme.
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Pay any pending GST liability.
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Issue a stock declaration for ITC eligibility in the regular scheme.
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Begin issuing tax invoices instead of bill of supply after withdrawal.
Impact of Withdrawal from Composition Scheme in GST
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Taxpayers must charge and collect GST on all outward supplies.
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They become eligible to claim Input Tax Credit (ITC).
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Compliance requirements increase (monthly/quarterly returns).
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Customers get more transparent tax invoices.
Conclusion
The How to Withdraw from Composition Scheme in GST process is simple but requires careful compliance. Whether it is voluntary or mandatory, timely action avoids penalties. Businesses should keep track of turnover, nature of supply, and compliance history before applying for withdrawal.
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