In case you are a registered taxpayer under the erstwhile indirect tax regime, you will be provided with a provisional registration under the GST regime and an opportunity to transition. Once this provisional registration has been granted, a dealer needs to provide information that will be verified upon which a final registration will be issued. Additionally, if a trader has chosen registration to come under the ambit of the composition levy scheme, he will be auto transitioned to the GST regime.
Who can opt for the composition levy?
Any trader who does not have an aggregate total turnover exceeding INR 50 lakhs can opt to be registered under the composition levy scheme, subject to certain conditions. It is pertinent to note that a trader having an aggregate turnover exceeding INR 50 Lakhs can only be registered as a regular dealer and not under the composition levy scheme. Once a dealer has switched to the regular dealer, he will have to comply with the conditions imposed on regular dealers and will no longer be eligible for any benefits under the composition levy scheme. These benefits include availing Input Tax Credit or ITC towards inward supplies and a charge on GST on the outward supplies.
In case a regular dealer transitions to a composite dealer, his closing stock is also affected. There may be reasons for such a transition as enumerated below –
Voluntarily opt for such transition
- By way of law if the aggregate turnover of the dealer exceeds INR 50 lakhs he will no longer be eligible as a composite dealer
Once a dealer has become a regular dealer, he will be allowed to avail of ITC in the closing stock of his inputs – including semi-finished and finished goods. This means that the closing stock so being availed on must be used for taxable supplies, must be used only for the business and no other purpose apart from being used during the course of or in furtherance of the business; the VAT paid on all the inputs part of the closing stock must be permitted as credit as under the previous law; there must be generated invoices associated with the closing stock so being availed on; and the invoices must be within the limit of 12 months from the date of their generation else they cannot be availed on.