Composition Levy

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Section 10 of the CGST Act provides for an option every ‘Registered person’ who is having aggregate turnover upto Rupees 1.5 Crores rupees during preceding FY to pay tax on a composite rate rather than regular rates. The Government has the power to increase the said limit of fifty lakh rupees to one crore rupees, by way of a notification.  The rates of composition as provided in the Acts are as under:

Category of Person Rate of Composition payable under CGST Rate of Composition payable under SGST Total tax payable under Composition
In case of a manufacturer 0.5% 0.5% 1%
In case of Restaurant and Catering Suplies 2.5% 2.5% 5%
Other Supplier of goods 0.5% 0.5% 1%

Other Conditions:

  • No permission for composition levy shall be granted unless all the registered taxable persons, having the same PAN also opt to pay tax under composition.
  • The permission shall stand withdrawn from the day on which his aggregate turnover during a FY exceeds Rs. 150 lakhs.
  • If the proper officer has reasons to believe that a taxable person was not eligible to pay tax under composition, such person shall, in addition to any tax that may be payable by him under other provisions of this Act, be liable to a penalty and the provisions of section 66 or 67, as the case may be, shall apply mutatis mutandis for determination of tax and penalty.

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