Composition Scheme-GST Rate & Threshold Limit under GST Law

A ‘Composition Scheme’ is an alternative method of levying tax designed for small taxpayers. If your business is small, but not quite small enough to be GST-exempt, you may be able to use your company’s aggregate turnover to qualify for the composition levy scheme. A simplified ‘Composition Scheme’ has been provided; vide Section 10 of Central Goods and Services Tax Act, 2017 (‘CGST Act, 2017’) for small taxable persons who do not have sufficient knowledge and expertise to comply with the GST requirements relating to records and accounts.

Currently, ‘Composition Scheme’ is available to those whose ‘aggregate turnover’ in the previous financial year did not exceed Rs. 150 lakhs. For Special Category States (Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura,) the limit is Rs 75 Lakh only. [See Notification No. 14/2019-Central Tax, dated 7-3-2019].

It is to be noted that Section 10 of CGST Act, 2017 was enforced w.e.f. 22.06.2017 vide Notification No. 1/2017-Central Tax, dated 19.06.2017.Section 10 of the CGST Act, 2017 provides that

“(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 under sub-section (1) of Section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding–

(a) One per cent of the turnover in State or turnover in Union Territory in case of a manufacturer;

(b) Two and half per cent of the turnover in State or turnover in Union Territory in case of persons engaged in making supplies referred in clause (b) of paragraph 6 of Schedule II; and

(c) 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. [See Chapter II ‘Composition Levy’ of Central Goods and Services Tax Rules, 2017]

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

Notification No. 08/2017 – Central Tax, dated 27.06.2017

As the above said proviso[proviso to Section 10(1) of CGST Act, 2017] gives the power to Government to increase the threshold limit upto the maximum one crore rupees (Rs. 1.00 cr), therefore,  in exercise of the powers conferred under the proviso to sub-section (1) of section 10 of the CGST Act, 2017, the Central Government had issued a Notification No. 08/2017 – Central Tax, dated 27.06.2017 in order to fix the limit of threshold of aggregate turnover for availing ‘Composition Scheme’ under Section 10 of the CGST Act, 2017. The said Notification provides that-

“an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees, may opt to pay, in lieu of the central tax payable by him, an amount calculated at the rate of,––

(i) one per cent of the turnover in State in case of a manufacturer,

(ii) two and a half per cent of the turnover in State in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II of the said Act, and

(iii) half per cent of the turnover in State in case of other suppliers:

Provided that the aggregate turnover in the preceding financial year shall be fifty lakh rupees in the case of an eligible registered person, registered under section 25 of the said Act, in any following States, namely: – (i) Arunachal Pradesh, (ii) Assam, (iii) Manipur, (iv) Meghalaya, (v) Mizoram, (vi) Nagaland, (vii) Sikkim, (viii) Tripura, (ix) Himachal Pradesh.”

Composition Limit:- In view of the above, initially, threshold limit was fix seventy-five lakh rupees to opt composition levy and fifty lakh rupees in the case of an eligible registered person, registered under section 25 of the said Act, in any following States, namely: – (i) Arunachal Pradesh, (ii) Assam, (iii) Manipur, (iv) Meghalaya, (v) Mizoram, (vi) Nagaland, (vii) Sikkim, (viii) Tripura, (ix) Himachal Pradesh.

Further, as Section 10 of CGST Act, 2017 mentioned that a registered person 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,as mentioned in this section. Therefore, the Central Government has also prescribed the rate of tax in Notification No. 08/2017 – Central Tax, dated 27.06.2017 which were same as mentioned in the Section 10 of the CGST Act, 2017.

Also, Central Goods and Services Tax Rules, 2017 (‘CGST Rule, 2017’) was made effective with effect from 22.06.2017. As per Rule 7 of the Central Goods and Services Tax Rules, 2017

“The category of registered person, eligible for composition levy under section 10 and the provisions of this Chapter, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table:-

Sl. No.	Category of registered person	Rate of tax
(1)	(2)	(3)
1.	Manufacturers, other than manufacturers of such goods as may be notified by the Government	One per cent of the turnover in the State or Union Territory
2.	Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II	Two and Half per cent of the turnover in the State or Union Territory
3.	Any other supplier eligible for composition levy under section 10 and the provision of this Chapter	Half percent of turnover of taxable supplies of goods in the State or Union Territory

Composition Scheme -GST Rate & Limit

[Notification No. 08/2017 – Central Tax, dated 27.06.2017]

Applicability Period: – These Rates are applicable from 01 July 2017 to 31st Dec 2017.

Threshold Limit: – Rs. 75 lakhs (Rs. 50 Lakhs for Special Category Sate) from 01^st July 2017 to 13^th October, 2017.

Type of Business	CGST	SGST	Total
Manufacturer	1%	1%	2%
Supplier of food & drinks (restaurant business)	2.5%	2.5%	5%
Traders (Other Suppliers)	0.5%	0.5%	1%

Note: Service Providers cannot opt composition scheme [Except supplier of food and non-alcoholic drinks].

Notification No. 46/2017 – Central Tax, dated 13.10.2017.

Increase of initially threshold limit seventy-five lakh rupees to one crore rupee to opt composition levy [via Notification No. 46/2017 – Central Tax, dated 13.10.2017 by amending Notification No. 08/2017 – Central Tax, dated 27.06.2017]

The Central Board of Indirect Taxes (CBEC) has increased the threshold limit from “seventy-five lakh rupees”to“one crore rupees” to opt composition levy.

“In exercise of the powers conferred by sub-section (1) of section 10 of the Central Goods and Services Tax Act, 2017 (12 of 2017) the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 08/2017 – Central Tax, dated 27.06.2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 647 (E), dated the 27th June, 2017, namely:-

 In the said notification,-

 (i) for the words “seventy-five lakh rupees”, the words, “one crore rupees” shall be substituted;

 (ii) for the words “fifty lakh rupees”, the words, “seventy-five lakh rupees” shall be substituted;”

Therefore, amended threshold limit was fix one crore rupees to opt composition levy and seventy-five lakh rupees in the case of an eligible registered person, registered under section 25 of the said Act, in any following States, namely: – (i) Arunachal Pradesh, (ii) Assam, (iii) Manipur, (iv) Meghalaya, (v) Mizoram, (vi) Nagaland, (vii) Sikkim, (viii) Tripura, (ix) Himachal Pradesh.

Notification No. 01/2018 – Central Tax, dated 01.01.2018.

Amendment in Notification No. 08/2017 – Central Tax, dated 27.06.2017 (Via Notification No. 01/2018 – Central Tax, dated 01.01.2018)

The CBEC has reduced the GST rate to half percent from one percent for the manufacturers who have opted composition scheme.

The CBEC has also notified that other suppliers who have opted for composition scheme,now only turnover of taxable supply of goods will be taxed at half percent rather than aggregate turnover at half percent.

“In exercise of the powers conferred by sub-section (1) of section 10 of the Central Goods and Services Tax Act, 2017 (12 of 2017) the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 08/2017 – Central Tax, dated 27.06.2017, published in the Gazette of India,Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 647 (E), dated the 27th June, 2017, namely:-

In the said notification, in the opening paragraph, –

(a) in clause (i), for the words one per cent., the words half per cent. shall besubstituted;

(b) in clause (iii), for the words half per cent.of the turnover, the words half per cent of the turnover of taxable supplies of goods shall be substituted.”

Consequential amendment in Rule 7 of the Central Goods and Services Tax Rules, 2017 regarding reduction of tax rate.Amended Rule 7of the Central Goods and Services Tax Rules, 2017 provided that

“The category of registered person, eligible for composition levy under section 10 and the provisions of this Chapter, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table:- 

Sl. No.	Category of registered person	Rate of tax
(1)	(2)	(3)
1.	Manufacturers, other than manufacturers of such goods as may be notified by the Government	*Half per cent of the turnover in the State or Union Territory
2.	Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II	**Two and Half per cent of the turnover in the State or Union Territory
3.	Any other supplier eligible for composition levy under section 10 and the provision of this Chapter	***Half percent of turnover of taxable supplies of goods in the State or Union Territory

*substituted for “one per cent” vide Notification No. 3/2018-Central Tax, dated 23.01.2018, w.e.f. 01.01.2018.

** substituted for “two and a half per cent”. Ibid.

*** substituted for “half per cent”. Ibid.

Composition Scheme -GST Rate & Limit

[Notification No. 46/2017 – Central Tax, dated 13.10.2017 & Notification No. 01/2018 Central Tax, dated 01.01.2018 & Rule 7]

Applicability Period: – These Rates are applicable from 01 Jan 2018 to 31st Jan 2019.

Threshold Limit: – Rs. 1.00 cr (Rs.75 Lakhs for Special Category Sate) from 14^th October 2017 to 31st Jan 2019.

Type of Business	CGST	SGST	Total
Manufacturer	0.5%	0.5%	1%
Supplier of food & drinks (restaurant business)	2.5%	2.5%	5%
Traders (Other Suppliers)	0.5%	0.5%	1%

Note: Service Providers cannot opt composition scheme [Except supplier of food and non-alcoholic drinks].

_________

CGST (Amendment) Act, 2018.

The maximum limit of one crore rupee under Section 10 of the CGST Act, 2017 has been substituted for One crore and fifty lakh rupees (Rs. 1.50 cr) by the CGST (Amendment) Act, 2018 dated 30.08.2018, w.e.f. 01.02.2019 vide Notification No. 2/2019 -Central Tax, dated 29.01.2019.

Further, a second proviso has been added to Section 10(1) of the CGST Act, 2017 by the CGST (Amendment) Act, 2018 dated 30.08.2018, w.e.f. 01.02.2019, as under-

“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.”

The CGST (Amendment) Act, 2018 has amended this section so as to raise the statutory threshold of turnover for a tax payer to be eligible for the composition scheme from one crore rupees to one crore fifty lakh rupees and to allow the composition tax payers to supply services, for upto a value not exceeding 10% of turnover in the preceding financial year or five lakh rupees, whichever is higher.

Accordingly, a person who opts for Composition Scheme may supply services of value not exceeding 10% of turnover in a State in the preceding financial year or Rs. 5 lakh, whichever is higher.For Example: Mr. X is a registered ‘Composition Dealer’ in Delhi and his turnover in a State in 2019-20 was Rs 35 Lakhs. He can supply services up to Rs 5 lakhs (10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher) in 2020-21.

It is to be noted that the ‘Composition Scheme’ was not available to supplier of services, except supply of food for human consumption (restaurant services till 01.02.2019). Moreover, with CGST (Amendment) Act, 2018, a Composition Dealer may supply service up to 10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher, in addition to the supply made in clause (a) or clause (b) or clause (c) of Section 10(1) of the CGST Act, 2017.

So, we can say that this is only a relaxation to existing composite dealer who opting to pay tax under clause (a) or clause (b) or clause (c) of Section 10(1) of the CGST Act, 2017, to make the supply of services up to 10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher. This relaxation is not available for a service provider who only supply of services except supply of food for human consumption.

Amendment in Rule 7 of the Central Goods and Services Tax Rules, 2017 for inclusion of ‘service’ for levy tax under Composition Scheme due to amendment in Section 10(1) of the CGST Act, 2017 by adding a second proviso w.e.f 01.02.2019. Amended Rule 7 of the Central Goods and Services Tax Rules, 2017 provided that

“The category of registered person, eligible for composition levy under section 10 and the provisions of this Chapter, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table:-

Sl. No.	Category of registered person	Rate of tax
(1)	(2)	(3)
1.	Manufacturers, other than manufacturers of such goods as may be notified by the Government	Half per cent of the turnover in the State or Union Territory
2.	Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II	Two and Half per cent of the turnover in the State or Union Territory
3.	Any other supplier eligible for composition levy under section 10 and the provision of this Chapter	Half percent of turnover of taxable supplies of #goods and services in the State or Union Territory

# substituted for “goods” vide Notification No. 3/2019-Central Tax, dated 29.01.2019, w.e.f. 01.02.2019.

Composition Scheme -GST Rate & Limit

[CGST Amendment Act, 2018 w.e.f. 01.02.2019 & Notification No. 46/2017 – Central Tax, dated 13.10.2017 & Notification No. 01/2018 Central Tax, dated 01.01.2018 & Rule 7]

Applicability Period: – These Rates are applicable from 01 Feb 2019 to 31st Mar 2019.

Threshold Limit: – Rs. 1.00 cr (Rs.75 Lakhs for Special Category Sate) from 14^th October 2017 to 31st Mar 2019.

Type of Business	CGST	SGST	Total
Manufacturer	0.5%	0.5%	1%
Supplier of food & drinks (restaurant business)	2.5%	2.5%	5%
Traders (Other Suppliers)	0.5%	0.5%	1%

Note: Composite Dealer may supply of services up to 10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher, at a 0.5% CGST and 0.5% SGST (Total 1%) rate of tax.

_________

Notification No. 14/2019 – Central Tax, dated 07.03.2019 (w.e.f. 01.04.2019)

Later on, in supersession of the Notification No. 08/2017 – Central Tax dated 27.06.2017, the Central Government issued a Notification No. 14/2019 – Central Tax dated 07.03.2019 by which threshold Limit for the composition scheme enhanced to 1.5 crore, for all States except Rs.75 lacs for (i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand. Revised limit shall come into force on the 1st day of April, 2019.

Notification No. 14/2019 – Central Tax– Seeks to supersede notification No. 08/2017 – Central Tax dated 27.06.2017 in order to extend the limit of threshold of aggregate turnover for availing Composition Scheme under Section 10 of the CGST Act, 2017 to Rs. 1.5 crores. The said Notification provides that-

“in supersession of the Notification No. 8/2017- Central Tax, dated the 27th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 647 (E), dated the 27th June, 2017, except as things done or omitted to be done before such supersession, the Central Government, on the recommendations of the Council, hereby specifies that an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9 of the said Act, an amount of tax as prescribed under rule 7 of the Central Goods and Services Tax Rules, 2017.

Provided that the said aggregate turnover in the preceding financial year shall be seventy five lakh rupees in the case of an eligible registered person, registered under section 25 of the said Act, in any of the following States, namely: – (i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand.”

Therefore, currently threshold limit is fixed one crore and fifty lakh rupees to opt composition levy and seventy-five lakh rupees in the case of an eligible registered person, registered under section 25 of the said Act, in any following States, namely: – (i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand.

Moreover, this was the first time when Notification provides that amount of tax shall be as prescribed under rule 7 of the Central Goods and Services Tax Rules, 2017. In earlier notification the amount of tax was provided in the earlier notification itself.

GST PRESUMPTIVE SCHEME-

Notification No. 02/2019-Central Tax (Rate), dated 07.03.2019 (w.e.f. 01.04.2019)

It is to be noted that even by the amendment in Section 10(1) of the CGST Act, 2018 by CGST Amendment, 2018, only manufacturers and traders having a turnover of services of up to Rs.5 lakhs or 10% of total turnover, were able to opt composition scheme and the same is not available to a person who is only a service provider other than a restaurant service provider.

Therefore, in order to provide the benefit of composition scheme, a decision was announced in favour of service providers in GST Council’s 32^nd meeting. Accordingly, a composition scheme is made available to services providers (or mixed suppliers), with an aggregate turnover in the preceding financial year up to Rs.50 lakhs.

The composition levy on services sector businesses other than restaurants is a recent addition to this list after the 32nd GST Council Meeting announced the composition scheme for services and mixed services. This composition scheme under GST Act will be applicable from 1^st April 2019 on wards. Prior to this announcement, services/mixed services businesses and individuals were not allowed to register under the GST composition scheme.

The CBIC has notified a New Scheme in GST vide Notification No. 2/2019-Central Tax (Rate), dated March 7, 2019 in which a tax payer has been allowed to pay GST on a presumptive basis at the rate of 6% (3% CGST and 3% SGST/UTGST).Though, notification does not refer to section 10 of the CGST Act 2017, It is similar to the existing composition scheme.

If registered person is eligible to take the benefit of this scheme, he shall pay GST at the rate of 6% (3% CGST and 3% SGST/UTGST) on his total supply up to Rs. 50 lakhs. If turnover from goods or services or both (mixed supplies) during the current year exceeds this limit, he shall continue to be eligible to avail of this scheme in that year. However, the benefit of concessional tax shall be available on the turnover of first Rs. 50 lakhs and the turnover which exceeds this limit shall be subject to GST as per the applicable rates.

The supplier opting for this scheme shall pay GST at the rate of 6% on all supplies made by him, irrespective of the fact whether such supply is exempt from tax or has different tax rates. For payment of tax, he is not allowed to claim the credit of taxes paid for inputs,input services or capital goods so procured by him. Meaning thereby he shall be paying GST at the rate of 6% from his pocket.Where supplier has taken the GST registration for the first time, the presumptive tax at the rate of 6% shall be payable on the supplies made by him only after the date of registration.

Composition& Presumptive Scheme -GST Rate & Limit

[CGST Amendment Act, 2018 w.e.f. 01.02.2019& Notification No. 14/2019 – Central Tax, dated 07.03.2019 & Rule 7 and Notification No. 02/2019-Central Tax (Rate), dated 07.03.2019]

Applicability Period: – These Rates are applicable from 01 April 2019 to 01^st Jan 2020

Threshold Limit: – Rs. 1.50 cr (Rs.75 Lakhs for Special Category Sate) from 01 April 2019 to 01^st Jan 2020.

Type of Business	CGST	SGST	Total Composition Scheme	Total Presumptive Scheme
Manufacturer	0.5%	0.5%	1%	–
Supplier of food & drinks (restaurant business)	2.5%	2.5%	5%	–
Traders (Other Suppliers)	0.5%	0.5%	1%	–
Goods or services or both (deemed as mixed supplies)	3%	3%	–	6%

Note: Composite Dealer may supply of services up to 10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher, at a 0.5% CGST and 0.5% SGST (Total 1%) rate of tax.

Finance (No.2) Act, 2019 pertaining to CGST & IGST Act, effective from 1st January 2020.

Initially , the scheme under Notification No. 02/2019-Central Tax (Rate), dated 07.03.2019 was introduced under Section 9(1) of CGST Act, 2017 which empowers Government to determine GST Rates and it was not composition scheme as per sections 10(1) and 10(2) of CGST Act .Now, regular composition scheme is introduced for service providers also, vide Section 10(2A) of CGST Act, 2017 introduced vide Finance (No. 2) Act, 2019 .

Finance (No. 2) Act 2019 was enacted on 01-08-2019. GST related amendments are contained in section 92 to section 116 of the Finance No. 2 Act 2019. As per section 1(2)(b) of the Finance No. 2 Act 2019, sections 92 to 112 and section 114 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Notification 01/2020-Central Tax dated 01-01-2020 has been issued which says that section 92 to section 112 except section 97,100, 103 to 110 shall come into force on 01-01-2020.

A new sub-section (2A) is being inserted in Section 10 of the CGST Act, 2017 to bring in an alternative composition scheme for supplier of services or mixed suppliers (not eligible for the earlier composition scheme) having an annual turnover in preceding financial year up to ₹ 50 lakhs.

Section 10(2A) of the CGST Act,2017-

“Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-section (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 per cent, 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 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 recommendation of the Council; and

(e) a causal 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 (43 of 1961), the registered person shall not be eligible to opt for scheme under this sub-section unless all such registered person opt to pay tax under this sub-section.”

Despite of above, explanation is being added to section 10 of the CGST Act, 2017 to clarify that:

i. For computing the aggregate turnover to determine eligibility for the composition scheme, value of exempt supplies 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; and

ii. For determining the value of turnover in a State or Union territory to calculate tax payable, value of exempt supplies 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; and value of the first supplies from 1st of April till the date when the taxpayer becomes liable for registration shall not be taken into account.

Explanation for the purposes of second proviso to Section 10(1) of the CGST Act, 2017:-

Further, after the second proviso, an explanation is also being added in Section 10(1) of the CGST Act, 2017 by Finance (No. 2) Act 2019.

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

Accordingly, a person who opts for Composition Scheme may supply services of value not exceeding 10% of turnover in a State in the preceding financial year or Rs. 5 lakh, whichever is higher.For Example: Mr. X is a registered ‘Composition Dealer’ in Delhi and his turnover in a State in 2019-20 was Rs 35 Lakhs. He can supply services up to Rs 5 lakhs (10% of turnover in previous financial year or Rs 5 lakhs, whichever is higher) in 2020-21.

Now, after the insertion of explanation in Section 10(1) of the CGST Act, 2017 by Finance (No. 2) Act 2019in the above example,suppose in addition to turnover of Rs 35 lakhs,income  from interest on loan was Rs 20 Lakhs in 2019-20,  he is still eligible for providing services up to Rs 5 lakhs as interest on discount on loans, deposits etc. will not be considered for determining the eligibility for providing services up to 10% of turnover.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.