Section 10 CGST Act 2017
[ Section 10 CGST Act 2017 Notified w.e.f 22.06.2017 vide Notification No. 1/2017 – Central Tax Dated 19.06.2017 Also Refer Point 20 below for rules 3 to 7 and Form Nos. GST-CMP 1 to GST-CMP 7 of the CGST Rules, 2017.]
Section 10 CGST Act 2017 explains Composition levy and is covered in Chapter III – Levy and Collection of tax
[Note : CGST Act 2017 also known as CENTRAL GOODS AND SERVICES TAX ACT, 2017 assented by the President of India on 12-4-2017 -An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. ]
Composition levy.
[ Note -3,5A ]
10. (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, 8[in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate] as may be prescribed13 , but not exceeding,—
(a) one per cent [ 0.5% w.e.f 01.01.2018 (refer Note 6 & 7)] 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 [ of the turnover of taxable supplies of goods (refer Note 6 & 7) ] in State or turnover in Union territory in case of other suppliers,
subject to such conditions and restrictions as may be prescribed14:
Provided that the Government may, by notification [Note 1 , 2 , 4, 5,14 ], increase the said limit of fifty lakh rupees to such higher amount, not exceeding 9[one crore and fifty lakh rupees], as may be recommended by the Council:
10 [Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.]
(2) The registered person shall be eligible to opt under sub-section (1), if—
11 [(a) save as provided in sub-section (1), he is not engaged in the supply of services; ]
(b) he is not engaged in making any supply of goods 15[or services] which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods 15[or services] ;
(d) he is not engaged in making any supply of goods 15[or services] through an electronic commerce operator who is required to collect tax at source under section 52; 16[***]
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the 17[Council; and]
18(f) he is neither a casual taxable person nor a non-resident taxable person: ]
Provided that where more than one registered persons are having the same Permanent Account Number [issued under the Income-tax Act, 1961 (43 of 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 subsection.
19[ (2A) 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, not eligible to opt to pay tax under sub-section (1) and sub-section (2), 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 under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding three per cent of the turnover in State or turnover in Union territory, if he is not—
(a) engaged in making any supply of goods or services which are not leviable to tax under this Act;
(b) engaged in making any inter-State outward supplies of goods or services;
(c) engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52;
(d) a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council; and
(e) a casual taxable person or a non-resident taxable person:
Provided that where more than one registered person are having the same Permanent Account Number issued under the Income-tax Act, 1961 (43 of 1961), the registered person shall not be eligible to opt for the scheme under this sub-section unless all such registered persons opt to pay tax under this sub-section. ]
(3) The option availed of by a registered person under sub-section (1) 19 [or sub-section (2A), as the case may be,] shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1) 19[or sub-section (2A), as the case may be,].
(4) A taxable person to whom the provisions of sub-section (1) 19[or, as the case may be, sub-section (2A)] 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) 19[or sub-section (2A), as the case may be,] 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. [Note -12 ]
19 [Explanation 1.—For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this section, the expression “aggregate turnover” shall include the value of supplies made by such person from the 1st day of April of a financial year upto the date when he becomes liable for registration under this Act, but shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.
Explanation 2.—For the purposes of determining the tax payable by a person under this section, the expression “turnover in State or turnover in Union territory” shall not include the value of following supplies, namely:—
| (i) | supplies from the first day of April of a financial year upto the date when such person becomes liable for registration under this Act; and | |
| (ii) | exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. ] |
Note on Section 10 of CGST Act 2017
20 Refer Rules of CGST Section 10 GST Composition scheme
19 Inserted by the Finance (No. 2) Act, 2019, w.e.f. 1-1-2020.
18 Inserted by the Finance (No. 2) Act, 2019, w.e.f. 1-1-2020.
17. Substituted for “Council:” by the Finance (No. 2) Act, 2019, w.e.f. 1-1-2020.
16.Word “and” omitted by the Finance (No. 2) Act, 2019, w.e.f. 1-1-2020.
15. Inserted by the Finance Act, 2020, w.e.f. a date yet to be notified.
14. Notification No. 14/2019-Central Tax, dated 7-3-2019 for turnover and other conditions.
13. Refer Following Notifications on Section 10 of CGST ACT
Notification No. 14/2019-Central Tax, dated 7-3-2019 for turnover and other conditions.
Circular No. 97/16/2019-GST, dated 5-4-2019 [Clarification regarding exercise of option to pay tax under Notification No. 2/2019-Central Tax (Rate), dated 7-3-2019].
12 . Circular No 77/50/2018 GST Dated 31st December 2018 : Denial of composition option by tax authorities and effective date thereof
11 Substituted by the Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-2-2019. Prior to its substitution, clause (a) read as under :
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;
10 Inserted by the Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-2-2019. Refer also CGST (Removal of Difficulties) Order, 2019, dated 1-2-2019/UTGST (Removal of Difficulties) Order, 2019, dated 1-2-2019.
9. Substituted for “one crore rupees” by the Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-2-2019.
8. Substituted for “in lieu of the tax payable by him, an amount calculated at such rate” by the Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-2-2019.
7 .Union Territory Tax seeks to further amend notification No. 2/2017 – Union Territory Tax so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers vide Notification No 1/2018 Union Territory Tax Dated 1st January, 2018
6. Central Tax seeks to further amend notification No. 8/2017 – Central Tax so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers. vide Notification No 1/2018 Central Tax Dated 1 st January, 2018
5A Seeks to exempt all taxpayers (except opting Composition Scheme) from payment of tax on advances received in case of supply of goods vide Notification No 66/2017 Central Tax Dated 15th November, 2017
5. Seeks to amend notification No. 8/2017-Central Tax vide Notification No 46/2017 Central Tax Dated 13th October, 2017
4. Seeks to amend notification No. 2/2017-Union Territory Tax vide Notification No 16/2017 Union Territory Tax Dated 13th October, 2017
3. Seeks to make payment of tax on issuance of invoice by registered persons having aggregate turnover less than Rs 1.5 crores vide Notification No 40/2017 Central Tax Dated 13th October, 2017
If you have any comments about Section 10 of CGST Act 2017 , share below your thoughts:
Pingback: Section wise Changes in GST w.e.f 01.02.2019 - Tax Heal
Pingback: ORDER No 01/2019 Central Tax : Interest on Loan and Deposits not part of GST Composition Scheme turnover - Tax Heal
Pingback: TaxHeal - GST and Income Tax Complete Guide Portal