Section 10 of CGST Act 2017: Composition Levy

Section 10 of CGST Act 2017: Composition Levy

Provisions under Section 10 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Composition Levy”, are as under:

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]$1 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 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

(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.

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]$2, 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.]$3

(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;

(a) save as provided in sub-section (1), he is not engaged in the supply of services;]$4

(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.

Amendments History:

$1. The words ‘in lieu of the tax payable by him, an amount calculated at such rate’ appearing in sub-section (1) substituted with the words ‘in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate’.*

$2. The words ‘and fifty lakh rupees’ inserted in Proviso to sub-section (1).* Thus, Govt empowered to enhance upper limit for composition scheme to Rs. 1.5 crore by notification. Earlier it was Rs. One crore.

$3. second Proviso to sub-section (1) inserted.*

$4. Clause (a) of sub-section (2) substituted.*

* Notified vide CGST (Amendment) Act, 2018, however commencement date is yet to be notified.

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The Central Goods and Services Tax (CGST) Act, 2017 was notified by Govt. on 12 April, 2017 and CBIC has notified the commencement date for various Sections/ Provisions thereof from time to time. Subsequently, Govt. has notified the Central Goods and Services Tax (CGST) (Amendment) Act, 2018 on 30 Aug. 2018. However, commencement date of amended provisions of various Sections is to be separately notified by CBIC, except where specifically mentioned in the CGST Amendment Act, 2018 itself.

Related Posts:

Central Goods and Services Tax (CGST) Act, 2017 (Chapter-wise/ Section-wise)

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