Any person who wants to pay tax under GST composition Scheme is required to Apply for composition levy on GST Comman Portal.

For Dealers who migrated from VAT and Services Tax : Once after getting provision registration users have to apply within 30 days from the appointed date ( Date on which Act came into force ) in FORM GST CMP 01.

New Registration :  At the time of Filing new Registration Application user have to opt for payment of tax under Section 10 of CGST Act, 2017 , So Section 10 is required to be selected.

What is Composition Levy :

Composition Levy is an option provided to small business enterprises whose aggregate turnover in preceding financial year did not exceed fifty Lakh rupees may opt to pay tax at much lower rates of

-half percent (0.5%)  ,

-one percent in case manufacturer, and

2.5% in case of person engaged in supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

Who can apply for Composition Levy : 

Any Person who satisfies above conditions may opt for composition levy :

(a) 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

(c) the goods held in stock by him have not been purchased from an unregistered person 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 received from un-registered persons;

(e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding financial year;

(f) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and

(g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

(h) whose aggregate turnover in preceding financial year did not exceed fifty Lakh rupees

filing of Returns opting for composition Scheme : Under composition dealer is required to file quarterly and one Anuual Return.

Tax Under Composition Scheme :

Suppose you are a normal trader falling under tax slab of 0.5% than if your annual turnover is Rs. 40 lakh than you are required to pay Rs. 20000 as GST.

Intimation for composition levy :

Every year dealer is required to file fresh intimation on GST Comman Portal otherwise he has to pay tax as par normal provisions of the Act.

Place a Request for Online GST Support from Fastlegal Team Members :

What is Composition Levy : 

Composition Levy is an option provided to small business enterprises whose aggregate turnover in preceding financial year did not exceed fifty Lakh rupees may opt to pay tax at much lower rates of

-half percent (0.5%)  ,

-one percent in case manufacturer, and

2.5% in case of person engaged in supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

 

Update: This limit of fifty lakh has been revised to Rs. 75 lakhs. Traders who have below 75 lakh trunover will have to pay 1 per cent tax , manufacturers will have to pay 2% while restaurant business will have to pay 5% if they opt to go for the composition scheme under GST.

 

GST Under Composition Levy ( Section 10 of CGST Act, 2017 ):

(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, an amount 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 rupees, as may be recommended by the Council.

(2) 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: 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.

(3) The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1).

(4) A taxable person to whom the provisions of sub-section (1) 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.

(5) If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) 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.

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