As per sub-section (1) of section 10, the registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay under Composition Scheme.
A. Conditions to be fulfilled for opting Composition Scheme
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;
(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:
Additional Conditions mentioned in the rules relating to Composition levy are as follows :
9a) he is neither a casual taxable person nor a non-resident taxable person;
(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 1;
(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9;
(d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;
B. Quantum of Taxes
- Manufacturer of other then notified goods as mentioned above : 2%
- persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II (restaurant services) : 5%
- Other Suppliers : 1%
C. Validity of composition levy
The option exercised by a registered person to pay tax under section 10 shall remain valid so long as he satisfies all the conditions mentioned in the said section and these rules.
D. Tax collection and Input tax credit
The supplier opted for composition scheme shall not collect any tax nor he is eligible to take input tax credit of any taxes paid by him under GST.
For detailed explanation of each conditions, procedural aspect and other matters relating to composition levy see the video as attached below.