Priyanshi Garg
Quick Summary
Introduction Section 10 of the CGST Act, 2017 offers small taxpayers an alternative to the standard GST regime: pay tax at a low, flat percentage of turnover, skip input tax credit altogether, and file quarterly instead of monthly. For a certain category of small trader, manufacturer, or service pr
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FAQ :
The GST Composition Scheme is an alternative to the standard GST regime for small taxpayers, allowing them to pay tax at a low, flat percentage of their turnover and file returns quarterly instead of monthly, foregoing input tax credit.
For most states and Union Territories, the aggregate turnover threshold is ₹1.5 crore. For specific smaller/special-category states like Arunachal Pradesh, Meghalaya, and Uttarakhand, the threshold is ₹75 lakh.
Manufacturers and traders pay a combined rate of 1% (0.5% CGST + 0.5% SGST) on their turnover. Restaurant services are taxed at 5% (2.5% CGST + 2.5% SGST), and service providers under Section 10(2A) pay 6% (3% CGST + 3% SGST).
Ineligible persons include service providers exceeding thresholds, suppliers of non-GST goods (like alcohol), those making inter-State outward supplies, casual or non-resident taxable persons, and suppliers making supplies through e-commerce operators required to collect tax at source (for services).
Composition taxpayers cannot collect GST from recipients and must issue a bill of supply instead of a tax invoice. They must also display 'composition taxable person' at their place of business and are denied input tax credit.
Since October 1, 2023, composition taxpayers can sell goods through an e-commerce operator if the supply is intra-State. The restriction now primarily applies to services routed through operators required to collect tax at source.
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