The Turnover Limit for the Composition Levy
The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rupees 1 crore but after 7th March, 2019 the limit has increased the threshold limit of aggregate turnover for availing Composition Scheme under Section 10 of the Central Goods and Service Tax Act, 2017 to Rs. 1.5 crores from existing Rs. 1 crores, (Rupees. 75 lakhs in case of few States)2. The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.
The Composition levy is an alternative method of levy of tax designed for small taxpayers whose aggregate turnover is up to Rupees 1.5 crore rupees.
Composition Scheme Tax Rate
Section 10 of CGST Act Specify the Composition Scheme Tax Rate
- (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 Rupees 1 crore. But after 7th March, 2019 the limit has increased the threshold limit of aggregate turnover for availing Composition Scheme under Section 10 of the Central Goods and Service Tax Act, 2017 to Rs. 1.5 crores from existing Rs. 1 crore, (Rupees. 75 lakhs in case of few States), 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, –
Note-Provided further that the registered person shall not be eligible to opt for composition levy under sub-section (1) of section 10 of the said Act if such person is a manufacturer of the goods, the description of which is specified in column (3) of the Table below and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table, namely:-
| Sl. No. | Tariff item, subheading, heading or Chapter | Description |
|---|---|---|
| 1. | 2105 00 00 | Ice cream and other edible ice, whether or not containing cocoa. |
| 2 | 2106 90 20 | Pan masala. |
| 3. | 24 | All goods, i.e. Tobacco and manufactured tobacco substitutes. |
Before 31.12.2017
| Category of registered persons | SGST | CGST | Total |
|---|---|---|---|
| Manufacturers, other than manufacturers of such | 1% | 1% | 2% |
| goods as may be notified by the Government | |||
| Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II | 2.5% | 2.5% | 5% |
| Any other supplier eligible for composition levy | .50% | .50% | 1% |
| under section 10 and the provisions of this Chapter | |||
After- 01.01.2018 Composition Scheme Tax Rate(SGST+CGST)
| Category of registered persons | SGST | CGST | Total |
|---|---|---|---|
| Manufacturers, other than manufacturers of such | .50% | .50% | 1% |
| goods as may be notified by the Government | |||
| Suppliers making supplies referred to in clause (b) | 2.5% | 2.5% | 5% |
| of paragraph 6 of Schedule II | |||
| Any other supplier eligible for composition levy | .50% | .50% | 1% |
| under section 10 and the provisions of this Chapter |
After- 01.02.2019
| Category of registered persons | SGST | CGST | Total |
|---|---|---|---|
| Manufacturers, other than manufacturers of such | .50% | .50% | 1% |
| goods as may be notified by the Government | |||
| Supplier of food & drinks (restaurant business) | 2.5% | 2.5% | 5% |
| Any other supplier eligible for composition levy< | .50% | .50% | 1% |
| Composition dealers may supply services of value not exceeding- 10% of turnover in a State or Union territory in the preceding financial year or 5 Lakhs, whichever is higher. |
| Category of registered persons | SGST | CGST | Total |
|---|---|---|---|
| Manufacturers, other than manufacturers of such | .50% | .50% | 1% |
| goods as may be notified by the Government | |||
| Supplier of food & drinks (restaurant business) | 2.5% | 2.5% | 5% |
| Any other supplier eligible for composition levy | .50% | .50% | 1% |
| Composition dealers may supply services of value not exceeding- 10% of turnover in a State or Union territory in the preceding financial year or 5 Lakhs, whichever is higher. | |||
| Presumptive Scheme – Goods or services or both (deemed as mixed supplies) | 3% | 3% | 6% |