Section 10 of GST – Composition levy with Introduction and Analysis

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GST Act 2017: Section 10 of GST Act 2017 – Composition levy. Check out details for GST Section 10 as per CGST Act 2017. Complete Analysis of GST Section 10, Section 10 of GST provide details for Composition levy. Explanation of Goods and Service Tax all Sections. Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 10 of CGST Act 2017 – Composition levy, gst all section and definitionsNow Check more details from below…..

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Section 10 of GST Act 2017 – Composition levy

Statutory Provisions- Effective from 1st February 2019 vide The Central Goods & Services Tax Amendment Act,2018

(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of tax payable under sub-section (1) of section 9, an amount calculated at such rate as may be prescribed, but not exceeding, –

(i) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer,
(ii) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and
(ii) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers,

subject to such conditions and restrictions as may be prescribed:

Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore and fifty lakh rupees, as may be recommended by the Council

Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent. of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.

(2) The registered person shall be eligible to opt under sub-section (1), if: —

  • (a) save as provided in sub-section (1), he is not engaged in the supply of services;
  • (b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;
  • (c) he is not engaged in making any inter-State outward supplies of goods;
  • (d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and
  • (e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:

Provided that where more than one registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section.

(3) The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1).

(4) A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.

(5) If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) despite not being eligible, such person shall, in addition to any tax that may be payable by him under any other provisions of this Act, be liable to a penalty and the provisions of section 73 or section 74 shall, mutatis mutandis, apply for determination of tax and penalty.

Introduction

This Section provides for a registered person to opt for payment of taxes under a scheme of composition, the conditions attached thereto and the persons who are entitled, but not mandated, to make payment of tax under this Scheme. The conditions, restrictions, procedures and the documentation in respect of this scheme are contained in Chapter II of the Central Goods and Service Tax Rules, 2017 from Rule 3 to Rule 7 (Composition Rules).

Analysis

Tax payment under this scheme is an option available to the taxable person. This scheme would be available only to certain eligible persons.

(a) Payment of tax: The composition scheme offers to a registered person, the option to remit taxes on the turnover as against outward supply-wise payment of taxes. In other words, the registered person opting to pay tax under the composition scheme needs only to ascertain the aggregate value of outward taxable supplies, and compute the tax thereon at a fixed rate, regardless of the actual rate of tax applicable on the said outward supply. The rate of tax prescribed in this regard is as under:

  • i. In case of manufacturers: 1% (0.5% CGST+ 0.5% SGST) of the turnover in the State/UT (Note: The rate applicable has been reduced from 2% to 1% vide Notification No. 1/2018-Central Tax dated 23.01.2018 effective 01.01.2018);
  • ii. In case of food/restaurant services:5% (2.5% CGST+ 2.5% SGST) of the turnover in the State/UT(i.e., in case of composite supply of service specified in Entry 6(b) of Schedule II);
  • iii. In case of other suppliers: 1% (0.5% CGST+ 0.5% SGST) of the turnover of taxable supplies in the State/UT (such as like traders, agents for supply of goods, etc.)

(b) Eligibility to pay tax under composition scheme: The conditions for eligibility to opt for payment of tax under the composition scheme is as follows:

i. Registered persons having an ‘aggregate turnover’ as defined under Section 2(6) of the Act (i.e.,          aggregate of turnovers across all States under the same PAN, including exempt supplies, supplies specified under Schedule I, etc.) does not exceed the prescribed limit in the preceding financial year will be eligible to opt for payment of tax under the composition scheme. Please refer to the discussion on aggregate turnover as explained in the definitions Chapter for a better  understanding of the expression. In this regard, the following may be noted:

  1. The prescribed threshold limit is Rs. 1 crore (and Rs. 75 lacs in case of Special Category States being Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh); The prescribed threshold limit is Rs. 1.5 crores (including States of Jammu & Kashmir , Assam, Uttarakhand and Himachal Pradesh).
  2. The aggregate turnover of the registered person should not exceed the said prescribed limit during the financial year in which the scheme has been availed;
  3. The ‘aggregate turnover’ as computed for a composition taxpayer shall not include any interest income, which is earned by way of supply of services such as extending deposits, etc. where such interest or discount is exempted under the GST Law.

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35 Comments
  1. Anil Goyal says

    We are manufacturer of Radiator coolant. Our sale are under 30lakh.
    Can we choose composition Scheme.

    1. Anil Goyal says

      We are manufacturer of Radiator coolant. Our sale are under 30lakh.
      Can we choose composition Scheme.

      1. saikrishna says

        yes

    2. rizwan says

      Upto 1.5 crore turnover you can choose composition scheme.
      But to opt in for composition scheme you have to wait till April next year and opt in window is close for now.

  2. Saket says

    inter state purchase in composite scheme

  3. Kushal Sakunia says

    We are suppliers of furniture hardwares Our sale are under 60lakh.
    Can we choose composition Scheme.

    1. Jagdish sharma says

      Yes you can avail composition scheme but condition no interstate sale

  4. Ashok says

    Interstate sale/supply restricted, but does it also restrict the purchase from other state?

    1. HITESH says

      NO,INTERSTATE PURCHASE ALLOWED

  5. sanjay says

    GST Clerification

    Make the invoice with IGST as the products are sold to us in Telangana though they are delivered in Maharashtra

  6. Aftab says

    Interstate sale/supply restricted, but does it also restrict the purchase from other state?

  7. Habib says

    I m running a bakery business, having a kitchen for making bakery items.and I m not provide any tip of service.only self service in bakery.
    My aggregate turnover less then Rs. 40 lakhs.
    If I go in composite schime,

    What will be the rate of tax ?

    1. Rizwan (GST Practitioner) says

      If you are manufacturer of bakery item and supplying the same intra-state (within state) you can go for composite scheme. Upto 1.5 crore turnover composite scheme is applicable.

      All manufacturer & traders attract 1% tax under composite scheme.

      but composition scheme window is closed for now. You can opt in next year in April.

  8. Zahra says

    Hi i am purchasing material at 5% gst stitching it as bags n selling at 18% gst… can i still opt for composition scheme?

  9. Rahul Khurana says

    to avail composition scheme current stock ka 10% extra tax pay karna hoga kya ??

  10. Naresh says

    i am a registered vat dealer in vat migrated into gst having turnover of rs 45 lakh. i want to adopt composition scheme. What liability on me on the opening stock as on 01/07 /17 purchased within the state but now there is no opening vat credit input on 1/7 /17 in books.

  11. PRADEEP KUMAR ACCOUNTENT SATNA MP says

    COMPOSITION LENA CHAHTA HU LEKIN 30.6.17 ME JO CLOSING STOCK ME PASS HAI US PER TAX JAMA KARNA HOGA KI NAHI AISE ME HAME COMPOSITION LENA CHAHIYE YA NAHI AGAR TAX NAHI JAMA KARTE HAI TO COMPOSITION MILEGA YA NAHI

  12. Rupesh Gupta says

    I am planning to open a retail out let PET Shop where the expected turnover is less then 50 lakh
    but the supplies are few products are in 0% GST. Can i avail the composite schme
    Please confirm . Some one said that 0% tax goods supplier can not avail Composite schme

    1. Adv. R. B. Munot says

      as per section 10,
      (2) The registered person shall be eligible to opt under sub-section (1), if
      (b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

      If such dealer engaged in supply of goods which are not leviable to tax under this Act, he can not opt composition scheme.

      1. Md osman ali says

        You cannot opt for composition if u r SUPPLYING 0% rated goods

  13. diti pachoree says

    I sell readymade garments and my annual turnover is less than 20 lacs. Do I come under composition scheme for payment of 0.5% . tax or 1% tax.

    1. vibhoom pandey GST practitioner says

      sir you are not liable to pay tax.

  14. Shanu Sharma says

    ) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II; means which goods??

    1. hp singh says

      restaurant services

  15. Prem gupta says

    Composition levy till 75 lac sale it is true

  16. Sanjay Patel says

    Sir, I obtain GST Under Composite Scheme as my Turnover is Near about Rs. 20 Lac,I am engage in Water Purifiers Sales & Service Business in State Only. I Purchase Water Purifiers Loos items within Maharashtra State. & Assembled it, & Sales.
    after obtain GST Under Composite Scheme Somehow i come to know that, Service & Maintenance Provider cant Obtain Composite Scheme. if it is true then what i do now with this GST Under Composite Scheme as my CA Said now you have Wait till the Year End.

    Please Help…

  17. sachinder kumar says

    suppose if a person have major stock or (i.e. 10 to 12 lakh) on 1 july2017, can he also opt for composition scheme

    1. Sachin says

      Yes He can if preceding year turn over is kess than 1 crore now (previously 75 lakh) and stock you held on 30.06.2017 would attaract 1% of Final amount

  18. Rohit Arora says

    Sir, I have GST Under Composite Scheme as my Turnover is Near about Rs. 50 Lac,I am engage in Bakery. I also wanted start online business in delhi only. Is this suitable under composite Scheme can i use the same GST number ?

  19. Shashank Agrawal says

    A cloth trader having opening stock of cloth as on 01/07/2017, opted composition under GST having expected turnover Rs. 50 lacs and his turnover in preceding financial year was less than 50 lacs. Please clarify that whether he will be liable to pay GST n opening stock of cloth.
    Thanks
    Shashank Agrawal

  20. dinkar karanwAL says

    which product is not leviable to tax under section 10

  21. s l saraf says

    gst composition scheme can be availed for building under construction for Advance sale
    can we now switch from normal to composition scheme

  22. Neeraj sahu says

    Mai railway ka tender ka kam karta hu.
    Kya msi composition scheem ko opt. Kar sakta hu?

  23. Kanai Sarkar says

    I am caterer business expected is less than 50 Lakes . Can I avail the Composition scheme. Pl, confirm.

  24. G SIVA says

    how much turnover limit for composition dealers

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