Composition Levy – Section 10 of CGST Act :
- Option to pay an amount in lieu of tax; minimum rate to be:
- 0.50% of the turnover in case of manufacturers ( other than specified);
- 2.50% of the turnover in case of suppliers covered under Sch. II, Para 6(b) such as Restaurants or Caterers
- 0.50% of the turnover in other cases
- Note: State GST rate in addition expected to be equal.
- No tax to be collected; No Input Tax Credit available
- Aggregate Turnover < Rs. 1 Crore* in the preceding FY (all-India basis for taxable persons having same PAN – who shall also opt for composition)
* Turnover Limit is Rs. 75 lakhs for Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh
Not economically viable for Business to Business Transactions
- No composition option in the following specific cases:
- Services supplied:
ØAny / all services (includes goods treated as supply of services by Schedule II), other than services covered under Schedule II, Paragraph 6(b) such as Restaurants
- Goods supplied:
ØNon-taxable goods
ØInter-State outward supplies
ØThrough e-commerce operators required to collect tax at source under section 52
ØNotified goods manufactured by the supplier
- Manufacture Of:
ØIce cream and other edible ice, whether or not containing cocoa
ØPan masala
ØAll goods, i.e. Tobacco and manufactured tobacco substitutes
- If aggregate turnover (all India basis) of preceding FY exceeds 1 Crore (If during the FY, the aggregate turnover exceeds 75 Lakhs, no composition from the following day.)