GST Composition Levy : gstcouncil.gov.in

Organisation : Goods & Services Tax Council (GST)
Facility Name : Composition Levy
Applicable States/UTs : All India
Website : https://gstcouncil.gov.in/

What is Composition Levy?

The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 lakhs ( Rs. 50 lakhs in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.

Related / Similar Facility : GST E-Way Bill System

Eligibility of Composition Levy

Composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross Rs. 75 lakhs. In the case of the following States, the limit of turnover is Rs. 50 lakhs:-

a) Arunachal Pradesh
b) Assam
c) Manipur
d) Meghalaya
e) Mizoram
f) Nagaland
g) Sikkim
h) Tripura
i) Himachal Pradesh

Rate of Composition Levy

FAQ On Composition Levy

Frequently Asked Questions FAQ On Composition Levy under GST

Who are the persons not eligible for composition scheme?
Following persons are not allowed to opt for the composition scheme:
a) a casual taxable person or a non-resident taxable person;
b) suppliers whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;
c) supplier who has purchased any goods or servcies from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;
d) supplier of services, other than restaurant service;
e) persons supplying goods which are not taxable under GST law;
f) persons making any inter-State outward supplies of goods;
g) suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52

When will a person opting for composition levy pay tax?
A person opting for composition levy will have to pay tax on quarterly basis before 18th of the month succeeding the quarter during which the supplies were made.

How will the aggregate turnover be computed for the purpose of composition?
Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess

Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies?
No. A taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies. When he switch over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed

Can a registered person, who purchases goods from a taxable person paying tax under the composition scheme, avail credit of tax paid on purchases made from the composition dealer?
No as the composition dealer cannot collect tax paid by him on outward supplies from his customers, the registered person making purchases from a taxable person paying tax under the composition scheme cannot avail credit.

What are the other compliances which a provisionally registered person opting to pay tax under the composition levy need to make?
Such person is required to furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the composition scheme, electronically, in FORM GST CMP-03, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, within a period of sixty days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf.