Amended and updated notes on section 10 of CGST Act, 2017. Detail discussion on provisions and rules related to composition levy.
Chapter III (Sections 7–11) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to levy and collection of tax. Section 10 of CGST 2017 provides for composition levy.
Recently, we have discussed in detail section 9 (Levy and collection) of CGST Act 2017. Today, we learn the provisions of section 10 of Central GST Act 2017.
Section 10 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 1/2017-Central Tax, G.S.R. 605(E), dated 19.06.2017. This notification was come into force from 22nd June, 2017 i.e. the commencement date of section 10 is 22-6-2017.
| Name of Act | The Central Goods and Services Tax Act 2017 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Central Board of Indirect Taxes & Customs |
| Governing body | GST Council |
| Number of Chapters | 21 |
| Number of Sections | 174 |
| You are reading: | |
| Chapter No. | III |
| Chapter Name | Levy and Collection of Tax |
| Section No. | 10 |
| Section Name | Composition levy |
| Updated 2024 Edition | GST Law Book PDF |
Relevant Rules and Forms for GST Section 10:
- Rule 3: Intimation for composition levy.
- FORM GST CMP-01: Intimation to pay tax under section 10 (composition levy)FORM GST CMP-02: Intimation to pay tax under section 10 (composition levy)FORM GST CMP-03: Intimation of details of stock on date of opting for composition levy
- FORM GST REG-01: Application for Registration
- Rule 4: Effective date for composition levy
- Rule 5: Conditions and restrictions for composition levy
- Rule 6: Validity of composition levy
- FORM GST CMP-04: Intimation/Application for Withdrawal from Composition Levy FORM GST CMP-05: Notice for denial of option to pay tax under section 10FORM GST CMP-06: Reply to the notice to show cause FORM GST CMP-07: Order for acceptance / rejection of reply to show cause notice
- FORM GST ITC-01: Declaration for claim of input tax credit under sub-section (1) of section 18
- Rule 7: Rate of tax of the composition levy
- Rule 11: Separate registration for multiple places of business within a State or a Union territory
- Rule 62: Form and manner of submission of statement and return
- FORM GST CMP-08: Statement for payment of self-assessed tax
- FORM GSTR-4: Return for financial year of registered person who has opted for composition levy or availing benefit of notification No. 02/2019- Central Tax (Rate)
- Rule 80: Annual return
- FORM GSTR-9A: Annual Return (For Composition Taxpayer)
Section 10 of Central GST – Composition levy1
Section 10 of CGST Act 2017 shall come into force on 22.06.2017 vide Notification No. 1/2017-Central Tax, G.S.R. 605(E), dated 19.06.2017.
Section 10(1) of CGST Act
Section 10(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 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, 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.
Explanation: For the purposes of second proviso, 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.
Section 10(2) of CGST Act
Section 10(2): The registered person shall be eligible to opt under sub-section (1), if: —
- (a) save as provided in sub-section (1), he is not engaged in the supply of services;
- (b) he is not engaged in making any supply of goods or services which are not leviable to tax under this Act;
- (c) he is not engaged in making any inter-State outward supplies of goods or services;
- (d) he is not 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;
- (e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council; and
- (f) he is neither a casual taxable person nor a non-resident taxable person:
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.
Section 10(2A) of CGST Act
Section 10(2A): 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, 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 recommendations of the Council; and
- (e) a casual 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, the registered person shall not be eligible to opt for the scheme under this sub-section unless all such registered persons opt to pay tax under this sub-section.
Section 10(3) of CGST Act
Section 10(3): The option availed of by a registered person under sub-section (1) or sub-section (2A), as the case may be, shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1) or sub-section (2A), as the case may be.
Section 10(4) of CGST Act
Section 10(4): A taxable person to whom the provisions of sub-section (1) or, as the case may be, sub-section (2A) 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.
Section 10(5) of CGST Act
Section 10(5): If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) or sub-section (2A), as the case may be, 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.
Explanation 1: For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this section, the expression “aggregate turnover” shall include the value of supplies made by such person from the 1st day of April of a financial year up to the date when he becomes liable for registration under this Act, but shall not include 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.
Explanation 2: For the purposes of determining the tax payable by a person under this section, the expression “turnover in State or turnover in Union territory” shall not include the value of following supplies, namely:––
- (i) supplies from the first day of April of a financial year up to the date when such person becomes liable for registration under this Act; and
- (ii) 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
Relevant Rules and Forms for Section 10:
- Rule 3: Intimation for composition levy.
- FORM GST CMP-01: Intimation to pay tax under section 10 (composition levy)
- FORM GST CMP-02: Intimation to pay tax under section 10 (composition levy)
- FORM GST CMP-03: Intimation of details of stock on date of opting for composition levy
- FORM GST REG-01: Application for Registration
- Rule 4: Effective date for composition levy
- Rule 5: Conditions and restrictions for composition levy
- Rule 6: Validity of composition levy
- FORM GST CMP-04: Intimation/Application for Withdrawal from Composition Levy
- FORM GST CMP-05: Notice for denial of option to pay tax under section 10
- FORM GST CMP-06: Reply to the notice toshow cause
- FORM GST CMP-07: Order for acceptance / rejection of reply to show cause notice
- FORM GST ITC-01: Declaration for claim of input tax credit under sub-section (1) of section 18
- Rule 7: Rate of tax of the composition levy
- Rule 11: Separate registration for multiple places of business within a State or a Union territory
- Rule 62: Form and manner of submission of statement and return
- FORM GST CMP-08: Statement for payment of self-assessed tax
- FORM GSTR-4: Return for financial year of registered person who has opted for composition levy or availing benefit of notification No. 02/2019- Central Tax (Rate)
- Rule 80: Annual return
- FORM GSTR-9A: Annual Return (For Composition Taxpayer)
- Section 10 of CGST Act 2017 shall come into force on 22.06.2017 vide Notification No. 1/2017-Central Tax, G.S.R. 605(E), dated 19.06.2017. ↩︎