CGST Section 10 – Composition Levy [Updated 2019]

CGST Section 10 – Composition Levy

CGST 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 [1][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,––

(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 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 [2][one crore and fifty lakh rupees], as may be recommended by the Council.

[3][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.]

CGST Section 10 (2)

The registered person shall be eligible to opt under sub-section (1), if:—

[4][(a) save as provided in sub-section (1), he is not engaged in the supply of services;]

(b) of paragraph 6 of Schedule II; (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.

CGST Section 10 (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).

CGST Section 10 (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.

CGST Section 10 (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.


[1] Substituted for the words “in lieu of the tax payable by him, an amount calculated at such rate” by the Central Goods and Services Tax (Amendment) Act, 2018. Date of Amendment : 29-08-2018,    Effective from : 29-08-2018,    Retrospective Effect : No

[2] Substituted for the words “one crore and fifty lakh rupees” by the Central Goods and Services Tax (Amendment) Act, 2018. Date of Amendment : 29-08-2018,    Effective from : 29-08-2018,    Retrospective Effect : No

[3] Proviso inserted by the Central Goods and Services Tax (Amendment) Act, 2018. – Date of Amendment : 29-08-2018, Effective from : 01-02-2019, Retrospective Effect : No

[4] Substituted by the Central Goods and Services Tax (Amendment) Act, 2018. 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 “Date of Amendment : 29-08-2018, Effective from : 29-08-2018, Retrospective Effect : No

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