Composition Scheme

There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the specified rate.

As per the recommendation of the Council, the proper officer of the Central or a State Government may, subject to such conditions and restrictions as may be prescribed, permit a registered taxable person, whose aggregate turnover in a financial year does not exceed fifty lacs rupees (Rs.50 lacs), has to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than two and a half percent in case of a manufacturer and one percent in any other case, of the turnover in a State during the year

Conditions for availing the benefit of composition scheme:

Sales should be within the state.

  • Sales should be within the state.
  • The value of aggregate turnover should not be more than Rs.50 Lacs.
  • No such permission shall be granted to a taxable person unless all the registered taxable persons, having the same PAN as held by the said taxable person, also opt to pay tax under the provisions of this sub-section.
    In simple words if a taxpayer opts for Composition Scheme then all the tax payers registered under the same PAN needs to pay tax on the same line i.e. under Composition Scheme.

Any Person

  • who is engaged in the supply of services; or
  • who makes any supply of goods which are not leviable to tax under this Act; or
  • who makes any inter-State outward supplies of goods; or
  • who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or
  • who is a manufacturer of such goods as may be notified on the recommendation of the Council

Prohibitions for a Composition tax payer:

  • Taxpayer cannot collect tax on supplies made by him.
  • Taxpayer cannot avail any Input tax credit.

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