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CMA Intermediate · Direct and Indirect Taxation · Composition Levy

Gupta Enterprises, a composition taxable person, ceases to satisfy a condition of section 10 on 10 March. Which course of action is required under rule 6?

He must pay tax under section 9(1) from the day the condition fails, issue tax invoices for later supplies, and file FORM GST CMP-04 within seven days of the event. Rule 6(2) applies, while the ITC-01 stock statement follows separately within thirty days.

  1. AContinue paying composition tax until the end of the financial year and then file CMP-04
  2. BPay tax under section 9(1) from 10 March, issue tax invoices for later supplies, and file FORM GST CMP-04 within seven days of the eventCorrect
  3. CPay tax under section 9(1) from 1 April of the next year and file CMP-04 within thirty days
  4. DPay tax under section 9(1) from 10 March and file FORM GST ITC-01 within seven days instead of CMP-04

Explanation

Rule 6(2) makes the person liable to pay tax under section 9(1) from the day the condition ceases to be satisfied. He must issue tax invoices thereafter and file intimation for withdrawal in FORM GST CMP-04 within seven days of the event. ITC-01 is a separate stock statement with thirty days under rule 6(6).

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