To give relief to small taxpayers having only intra-state outward supply ,there is composition scheme under GST (even earlier under state VAT law too there was composition scheme) where registered person will not become part of credit chain i.e. cannot take ITC on inward supplies and cannot collect tax from customer on outward supplies. GST law has also extended composition scheme to registered persons who is engaged in supply of service (aggregate turnover limit is Rs.50 lakh in case of service other than restaurant service (refer section 10(2A) of CGST Act, 2017 and SGST/UTGST Act, 2017) instead a specified rate or flat rate.
Rate of tax for the composition taxpayer is as under:
|S.No.||Category of taxpayer under composition scheme||Rate of tax|
|1||Manufacturer other than manufacture engaged in supply of following :
2105 00 00 :- Ice cream and other edible ice, whether or not containing cocoa
2106 90 20 :- Pan masala
24 :- All goods, i.e. Tobacco and manufactured tobacco substitutes
|0.5 + 0.5 = 1%|
|2||Restaurant Service –
(other than alcoholic liquor)
|2.5 + 2.5 = 5%|
|3||Traders (Other Suppliers)||0.5 + 0.5 = 1%|
|4||Supplier of service or mixed supplier of goods and services||3 + 3 = 6%|
For availing composition scheme (for goods and restaurant service) aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees (Rs.1.5 crore) for states and union territories not covered below
In case of following states aggregate turnover (for goods and restaurant service) limit shall seventy five lakh (Rs.75 lakh)
(i) Arunachal Pradesh,
Following persons cannot take composition scheme as per section 10(2) of CGST and SGST/UTGST Act, 2017
1. Initially person opting for composition scheme could not make outward supply of service but Central Goods and Services Tax (Amendment) Act, 2018 made changes in this condition which allowed that registered person can opt for composition scheme if value of supply does not exceed 10% of turnover in a state or union territory in the preceding financial year or Rs. 5 lakh whichever is higher
2. Person is not engaged in non-taxable supply like petrol, diesel etc.
3. Person is not engaged in making inter-state outward supplies of goods. Person option for composition scheme can make inter-state inward supplies of goods or services or both.
4. Person is not engaged in making any supply of goods through an electronic commerce operator (ECO) who is required to collect tax at source under section 52.
5. Person is neither casual taxable person nor non-resident taxable person
6. Specified categories of manufacturers as may be notified by the Government on the recommendation of the Council and notified goods are ice cream and other edible ice whether or not containing cocoa (HSN – 2105 00 00), Pan masala (HSN – 2106 90 20), Tobacco and manufactured tobacco substitutes (HSN -24) and Aerated Water (2202 10 10)
For details refer section 10, 9(3) and 9(4) of CGST Act, 2017 and SGST/UTGST Act 2017
Disclaimer – Author has exercised utmost care while writing this article, but still this article may contain some error or mistake and no part of this article/writing should be construed or considered as any advice or consultancy whether professional or otherwise.