GST Composition Forms: CMP-01, CMP-02, CMP-03, CMP-05, CMP-06 & CMP-07

Managing GST compliance can feel overwhelming for small businesses, especially those with limited resources or accounting support. To ease this burden, the Government of India introduced the GST Composition Scheme, a simplified tax structure designed to reduce paperwork, lower tax rates and make compliance easier.

But opting into and managing the Composition Scheme requires proper use of certain forms such as GST CMP-01, CMP-02, CMP-03, CMP-04, CMP-05, CMP-06 and CMP-07. Each of these forms serves a unique purpose, from opting into the scheme to responding to notices.

This blog will explain all the Composition Forms in simple language, ensuring businesses understand when and how to use each form for smooth compliance.

Understanding the GST Composition Scheme

The GST Composition Scheme is a voluntary scheme available to small taxpayers allowing them to pay GST at a fixed, lower rate and file minimal returns. It is best suited for: -

• Traders
• Manufacturers
• Restaurants not serving alcoholic beverages
• Certain eligible service providers (as per specific notifications)

Eligibility and Turnover Limits

• For suppliers of goods: ₹1.5 crore turnover limit (₹75 lakh for special category states).
• For certain service providers: A special composition route is available (up to defined turnover limits) with a fixed rate under the specific conditions.

Key Features of the Composition Scheme

• Simplified compliance with quarterly filings
• Lower tax rates compared to the regular GST scheme
• No Input Tax Credit (ITC) allowed
• Cannot issue tax invoices, only bill of supply
• No inter-state supply, no supply through e-commerce operators liable to collect TCS and no supply of certain restricted goods

With this understanding, let’s explore each GST Composition Form.

GST CMP-01 – Intimation for Composition Scheme (Migration from Pre-GST Regimes)

1. Who should file?

Businesses registered under VAT, Service Tax or Excise during the pre-GST period who wish to migrate to GST under the Composition Scheme.

2. Purpose

To notify the GST department about opting for the Composition Scheme during the GST migration process. 

3. When to file?

Before the appointed date or within the migration window specified by the government.

Once accepted, the taxpayer must adhere to all composition rules, including filing CMP-03 for stock declaration.

GST CMP-02 – Intimation to Opt for Composition (Existing GST Taxpayers)

1. Who should file?

Regular GST taxpayers who want to switch to the Composition Scheme for the upcoming financial year.

2. Purpose

To opt into the Composition Scheme for the next financial year.

3. When to file?

Before the start of the financial year, typically on or before 31st March.

After filing CMP-02, the Composition Scheme becomes effective from 1st April of the next year.

GST CMP-03 – Stock Intimation Statement

1. Who should file?

Taxpayers who have opted for the Composition Scheme via CMP-01 or CMP-02.

2. Purpose

To declare stock, semi-finished goods, finished goods and goods received from unregistered suppliers as on the date of opting into the scheme.

3. When to file?

Within the prescribed time from the date of opting, commonly within the duration of 90 days, it depends on notifications or portal requirements.

This helps the tax authorities verify eligibility and adjust any ITC or liability related to the transition.

GST CMP-04 – Intimation for Withdrawal from Composition Scheme

1. Who should file?

Taxpayers who want to exit the Composition Scheme voluntarily or due to ineligibility (e.g., turnover exceeding the limit, change in business model).

2. Purpose

To formally communicate withdrawal from the Composition Scheme.

After opting out, the taxpayer must switch to the regular scheme and comply with the normal GST return filing and tax payment rules.

GST CMP-05 – Show Cause Notice for Suspected Ineligibility

1. Who issues it?

The GST Officer.

2. Why is it issued?

If the officer suspects that the taxpayer: -

• Has made inter-state supply
• Exceeded turnover limits
• Supplied restricted items
• Claimed ITC incorrectly
• Issued tax invoices instead of bills of supply

The CMP-05 notice demands clarification from the taxpayer.

GST CMP-06 – Reply to Show Cause Notice

1. Who should file?

Taxpayers who receive CMP-05.

2. Purpose

To simplify the officer’s concerns or issues and submit evidence supporting continued eligibility under the scheme.

3. What to include?

• Documentary proof
• Written explanations
• Clarifications addressing every allegation

Failure to respond may result in the automatic removal from the scheme.

GST CMP-07 – Final Order on Composition Eligibility

1. Who issues it?

The GST Officer, after reviewing the taxpayer’s reply in CMP-06.

2. Purpose

To communicate whether the reply is acceptable or the taxpayer is being removed from the composition scheme.

If it gets rejected, the taxpayer must immediately shift to the regular GST regime and comply with monthly returns and applicable tax rates.

Conclusion

The GST Composition Scheme offers a simplified and compliance-friendly route for the small businesses. However, to fully benefit from lower tax rates and reduced paperwork, taxpayers must understand the correct forms and deadlines involved.

Here’s a quick recap: -

• Opting In: CMP-01, CMP-02
• Stock Declaration: CMP-03
• Withdrawal: CMP-04
• Notice & Responses: CMP-05, CMP-06, CMP-07

With the right knowledge and timely filing, businesses can enjoy a hassle-free GST experience under the Composition Scheme. Staying compliant is key and understanding these forms is the first step. If you need professional help in legal compliance, do contact to CRSPL Business Consultants.