GST on Exempt and Zero Rate Supplies under Composition Scheme?

Hello Friends,

Is it necessary to pay tax under GST for sale of exempted or zero-rated goods @ 1% under composition scheme? I deal with all taxable, exempt and zero-rate goods. Kindly clarify.

Some say i need to pay 1 % on exempt and zero rated as well. please clear my confusion.

I feel that is unfair to pay tax on exempt or zero-rated goods under composition scheme, while there is no tax liability for a regular taxpayer for such goods.

 

Thanks in Advance.

 

Replies (10)
Quick Summary
Under the GST composition scheme, tax is payable on aggregate turnover which includes taxable as well as exempt supplies. Hence, composition dealers may be liable to pay composition tax even on exempt supplies, though they cannot make inter-state outward supplies or claim ITC.

How it is Zero rated supply?. Zero rated supply means export of goods, supply to SEZ Units, etc , under Composition scheme, Export is not allowed, only Import and Supply within state allowed so please clerify.

Yes sorry. Exempted goods. no zero-rated supply. 

i am a manufacturer and seller of my products.

You have to pay tax on aggregate turnover and As per section 2(6) of the CGST Act. Aggregate turnover include taxable supply as well as exempt supply, etc , so you liable to pay tax on both .

please  confirm with others also . 

First of all can a composition dealer make inter state supplies?

Composition dealer can't make inter state supplies.
I think He Can purchase Inter-state, even Import services. but Can not sale Inter-state, just confirm.

The notification no 01/2018 CT dated 01-01-2018 states that the ‘other suppliers’ (i.e. traders) would be required to pay only on the taxable supplies of goods @ 1%. However, in terms of section 2(108) of the CGST Act, a taxable supply would include exempt supplies also as there is a levy on the exempted goods as well. Hence the wordings of the notification might not be actually executing the decisions of the Council meet.Therefore composition tax has to be paid even on the exempted supplies/nil rated/zero rated.

Yes composition dealer purchase from other state but can't made sale in other state.
Composition dealer can't take input tax credit.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Related Topics :

Loading
Company
ARTICLESHIP 16 September 2026
Article Assistant

MANUJ SHARMA AND COMPANY

Noida

CA Inter

View Details
Company
08 September 2026
Audit Executive

Thammana & Associates

Srikakulam

B.Com

View Details
Company
ARTICLESHIP 15 September 2026
Freelance Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
09 September 2026
Semi Qualified CA / CA Inter - 2 Groups Cleared

Getmyca Consultant Pvt Ltd

New Delhi

CA Inter

View Details
Company
09 September 2026
SENIOR AUDITOR & ACCOUNTS MANAGER

Anupam Parashar & Co.

Ghaziabad

CA Final

View Details
Company
ARTICLESHIP 21 September 2026
CA Article Assistant

KK & Company Chartered Accountant

Pune

CA Inter

View Details
Company
ARTICLESHIP 30 September 2026
CA Article Assistant

CA Suraj Garg & Associates

New Delhi

CA Final

View Details