who can opt for composition scheme ?
- A registered person , whose aggregate turnover in the preceding financial year did not exceed Rs. 150 lakhs rupees can opt for composition scheme. this limit can be further increased up to Rs 2 crore.
- for example :- if I have turnover in FY 2016-17 of Rs 90 lakhs and turnover in 2017-18 of Rs 160 lakhs. can I opt composition scheme in FY 2017-18?
- Yes, as my aggregate turnover in the preceding FY i.e 2016-17 is less than 150 lakhs. however , I would not be eligible for composition scheme in 2018-19. since my turnover for FY 2017-18 is greater than Rs. 150 lakhs.
- such registered person should not be
- engaged in the supply of services other than service specified in clause (b) of para 6 of schedule I i.e. Restaurant service
- Engaged in making any supply of goods which are not leviable to tax under this act.
- Engaged in making any inter-state supplies of goods.
- Engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and
- He is not a manufacture of such goods as may be notified by the government on the recommendation of the council.
Condition for Composition Levy
- He is neither a causal taxable person nor a non-resident taxable person;
- Migration from the existing law to new law :- 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.
- the goods held in stock by him have not been purchased from a unregistered supplier and where purchased he pays the tax under sub section (4) of section 9 ;
- New Registration:- he shall pay tax under sub section (3) or sub section (4) of section 9 on inward supply of goods or services or both.
- 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.
- 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
- 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.
|S.No.||Category of person||rate of tax|
|1||Manufacturers , other than Manufacturers of such goods as may be notified by the government||1%|
|2||suppliers making supplies referred to in clause (b) of paragraph 6 of schedule II (resturant)||5%|
|3||any other suppliers||1%|