Section 10

Composition Levy

Section 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,

in lieu of the tax payable by him, an amount calculated at such rate

in lieu of tax payable by him under section 9(1), an amount of tax calculated as such rate  

(Substituted by CGST Amendment Act 2018 wef 1st Feb 2019)

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,

One Crore and Fifty Lakh Rupees  (Substituted by CGST Amendment Act 2018 wef 1st Feb 2019)

as may be recommended by

the Council.

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 10% of turnover

in a state or a 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:-

(a)   he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;

(a)   Save as provided in subsection (1), he is not engaged in the supply of services (Substituted by CGST Amendment Act 2018, wef 1st Feb 2019)

(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.

Thanks

CA Rahul Gupta