Provisions under Section 10 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Composition Levy”:
Section 10 of CGST Act 2017: Composition Levy (CHAPTER III LEVY AND COLLECTION OF TAX)
(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate [text substituted from 01/02/2019: refer Note 1(a)], as may be prescribed, but not exceeding,-
(a) one percent of the turnover in State or turnover in Union territory in case of a manufacturer,
(b) two and a half percent 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
(c) half percent 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 rupees one crore and fifty lakh rupees [text substituted from 01/02/2019: refer Note 1(b)], 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 percent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher. [second proviso inserted from 01/02/2019: refer Note 1(c)]
Explanation.- For the purposes of second proviso, the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount shall not be taken into account for determining the value of turnover in a State or Union territory. [explanation inserted from 01/01/2020: refer Note 2(a)]
(2) The registered person shall be eligible to opt under sub-section (1), if:-
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II save as provided in sub-section (1), he is not engaged in the supply of services save as provided in sub-section (1), he is not engaged in the supply of services; [text substituted from 01/02/2019: refer Note 1(d)]
(b) he is not engaged in making any supply of goods or services [text inserted from 01/01/2021: refer Note 3] which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods or services [text inserted from 01/01/2021: refer Note 3];
(d) he is not engaged in making any supply of goods or services [text ‘or services’ inserted from 01/01/2021 (Note 3) and text ‘goods or’ omitted from 01/10/2023 (Note 4)] through an electronic commerce operator who is required to collect tax at source under section 52; and [text omitted from 01/01/2020: refer Note 2(b)]
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council; and [text inserted from 01/01/2020: refer Note 2(c)]
(f) he is neither a casual taxable person nor a non-resident taxable person: [clause (f) inserted from 01/01/2020: refer Note 2(d)]
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.
(2A) Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, not eligible to opt to pay tax under sub-section (1) and sub-section (2), whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding three percent of the turnover in State or turnover in Union territory, if he is not–
(a) engaged in making any supply of goods or services which are not leviable to tax under this Act;
(b) engaged in making any inter-State outward supplies of goods or services;
(c) engaged in making any supply of goods or [text omitted from 01/10/2023: refer Note 4] services through an electronic commerce operator who is required to collect tax at source under section 52;
(d) a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council; and
(e) a casual taxable person or a non-resident taxable person:
Provided that where more than one registered person 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 this sub-section unless all such registered persons opt to pay tax under this sub-section. [sub-section (2A) inserted with proviso from 01/01/2020: refer Note 2(e)]
(3) The option availed of by a registered person under sub-section (1) or sub-section (2A), as the case may be [text inserted from 01/01/2020: refer Note 2(f)], shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1) or sub-section (2A), as the case may be [text inserted from 01/01/2020: refer Note 2(f)].
(4) A taxable person to whom the provisions of sub-section (1) or, as the case may be, sub-section (2A) [text inserted from 01/01/2020: refer Note 2(g)] 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) or sub-section (2A), as the case may be [text inserted from 01/01/2020: refer Note 2(h)], 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.
Explanation 1.- For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this section, the expression “aggregate turnover” shall include the value of supplies made by such person from the 1st day of April of a financial year up to the date when he becomes liable for registration under this Act, but shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. [explanation 1 inserted from 01/01/2020: refer Note 2(i)]
Explanation 2.– For the purposes of determining the tax payable by a person under this section, the expression “turnover in State or turnover in Union territory” shall not include the value of following supplies, namely:–
(i) supplies from the first day of April of a financial year up to the date when such person becomes liable for registration under this Act; and
(ii) exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. [explanation 2 inserted from 01/01/2020: refer Note 2(i)]
| Note: CBEC notifies 22/06/2017 as the commencement date vide Notification 1/2017. |
Amendments History:
1. Amendments vide Section 5 of the CGST (Amendment) Act, 2018, followed with Notification 2/2019 on commencement date of 01/02/2019:
a) in sub-section (1), the text ‘in lieu of the tax payable by him, an amount calculated at such rate’ substituted with the text ‘in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate’;
b) in the proviso to sub-section (1), the words ‘one crore and fifty lakh rupees’ substituted for the words ‘one crore rupees’;
c) Second Proviso to sub-section (1) inserted;
d) clause (a) of sub-section (2) substituted;
2. Amendments vide Section 93 of the Finance Act, 2019, followed with Notification 1/2020 on commencement date of 01/01/2020:
a) Explanation inserted after second proviso to sub-section (1);
b) in clause (d) of sub-section (2), the word ‘‘and’’ omitted;
c) in clause (e) of sub-section (2), the word ‘‘Council’’ substituted with the words ‘‘Council; and’’;
d) Clause (f) inserted in sub-section (2).
e) Sub-section (2A) inserted.
f) in sub-section (3), the text “or sub-section (2A), as the case may be,” inserted at both the places where they occur;
g) in sub-section (4) the text “or, as the case may be, sub-section (2A)” inserted;
h) in sub-section (5) the text “or sub-section (2A), as the case may be,” inserted, and
i) Explanation 1 and 2 inserted after sub-section (5).
3. The text “or services” inserted in clauses (b), (c) and (d) of sub-section (2) vide Section 119 of the Finance Act 2020, followed with Notification 92/2020 on commencement date of 01/01/2021.
4. The text “goods or” omitted from clause (d) of sub-section (2) and clause (c) of sub-section (2A), vide section 137 of the Finance Act, 2023, followed with Notification 28/2023 on commencement date of 01/10/2023.
Related Posts:
Composition Threshold Increased to Rs 1.5 Cr (01/04/2019)
Composition Threshold Increased to Rs 1 Cr (13/10/2017)
Composition Threshold Prescribed (Rs 75 Lac) (27/06/2017)
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| CGST Act 2017: Last updated 15/02/2024 |
| The CGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended through the CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance/Act 2020, Finance Act 2021, Finance Act 2022, Finance Act 2023, CGST Amendment Act 2023, CGST Second Amendment Act 2023 & Finance Act, 2024 including various Notifications/Orders issued by the Govt./ CBIC from time to time, relating to the commencement dates of various sections and provisions in the respective CGST/Amendment Acts, wherever required. Information on this page is a section-wise compilation of the amendments to the CGST Act, 2017 made through various notifications issued by CBIC from time to time (upto 15th February, 2024), with the best possible efforts for accuracy. In any case, E&OE. For official or updated information, please visit the CBIC website. |
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