CHARGE OF GST (Levy & Collection)

The provisions relating to levy and collection of CGST and IGST are contained in
section 9 of the CGST Act, 2017 and section 5 of the IGST Act, 2017, respectively.
Let us now have a fundamental idea of intra-State supply and inter-State supply.

As a general rule, where the location of the supplier and the place of supply of goods or
services are in the same State/Union territory, it is treated as intra-State supply of
goods or services respectively.

Similarly, where the location of the supplier and the place of supply of goods or
services are in (i) two different States or (ii) two different Union Territories or (iii) a
State and a Union territory, it is treated as inter-State supply of goods or services
respectively.

RELEVANT DEFINITIONS

Electronic Commerce: means the supply of goods or services or both including digital
products over digital or electronic networks.

Electronic Commerce Operator: means any person who owns, operates or manages a
digital or electronic facility or platform for electronic commerce.

Exempt supply: means supply of any goods or services or both which attracts nil rate of
tax or which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and includes non-taxable supply.

Non-taxable supply: means a supply of goods or services or both which is not leviable
to tax under this Act or under the Integrated Goods and Services Tax Act.

Aggregate turnover: means the aggregate value of all taxable supplies (excluding the
value of inward supplies on which tax is payable by a person on reverse charge basis),
exempt supplies, exports of goods or services or both and inter-State supplies of
persons having the same Permanent Account be computed on all India basis but
excludes central tax, State tax, Union territory tax, integrated tax and cess.

Business: includes -

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any
other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to ( above
a)
(c) any activity or transaction in the nature of ( above, whether or not there is
volume, frequency, continuity or regularity of such transaction
(d) supply or acquisition of goods including capital assets and services in connection
with commencement or closure of business
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(e) provision by a club, association, society, or any such body for a subscription or any
other consideration) of the facilities or benefits to its members, as the case may
be;
(f) admission, for a consideration, of person s to any premises; and
(g) services supplied by a person as the holder of an office which has been accepted
by him in the course or furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker
or activities of a licensed book maker in such club;
(i) any activity or transaction undertaken by the Central Government, a State govt.
or any local authority in which they are engaged as public authorities.

INDIA MEANS :

LEVY & COLLECTION OF CGST & IGST [SECTION 9 OF THE CGST ACT &
SECTION 5 OF THE IGST ACT]

STATUTORY PROVISIONS
 CHARGE OF GST (Levy & Collection)
Section 9 of Levy and collection (CGST)
the CGST
Act, 2017
Sub-section Particulars
1. Subject to the provisions of sub-section (2), there shall be levied a tax
called the central goods and services tax on all intra-State supplies of
goods or services or both, except on the supply of alcoholic liquor for
human consumption, on the value determined under section 15 and at
such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in
such manner as may be prescribed and shall be paid by the taxable
person.
2. The central tax on the supply of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas and aviation
turbine fuel shall be levied with effect from such date as may be
notified by the Government on the recommendations of the Council.
3. The Government may, on the recommendations of the Council, by
notification, specify categories of supply of goods or services or both,
the tax on which shall be paid on reverse charge basis by the recipient
of such goods or services or both and all the provisions of this Act shall
apply to such recipient as if he is the person liable for paying the tax in
relation to the supply of such goods or services or both.
4. The Government may, on the recommendations of the Council, by
notification, specify a class of registered persons who shall, in respect
of supply of specified categories of goods or services or both received
from an unregistered supplier, pay the tax on reverse charge basis
as the recipient of such supply of goods or services or both, and all the
provisions of this Act shall apply to such recipient as if he is the person
liable for paying the tax in relation to such supply of goods or services
or both.
5. The Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on intra-State
supplies of which shall be paid by the electronic commerce operator if
such services are supplied through it, and all the provisions of this Act
shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services.
Provided that where an electronic commerce operator does not have a
physical presence in the taxable territory, any person representing such
electronic commerce operator for any purpose in the taxable territory
shall be liable to pay tax: Provided further that where an electronic
commerce operator does not have a physical presence in the taxable
territory and also he does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in
the taxable territory for the purpose of paying tax and such person
shall be liable to pay tax.
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As per section 5 of IGST Act in above table Intra state supply shall be substitute by
Inter state supply.

Tax payable on supply of goods or services or both under reverse charge

CGST/IGST shall be paid by the recipient of goods or services or both, on reverse

charge basis, in the following cases:

❑Supply of such goods or services or both, as notified by the Government on the

recommendations of the GST Council.

❑ Supply of specified categories of goods or services or both by an unregistered

supplier to specified class of registered persons, as notified by the Government on
recommendation of GST Council.

All the provisions of the CGST Act/ IGST Act shall apply to the recipient in the
aforesaid cases as if he is the person liable for paying the tax in relation to the supply
of such goods or services or both.

REVERSE CHARGE MECHANISM

Generally, the supplier of goods or services is liable to pay GST. However, under the
reverse charge mechanism, the liability to pay GST is cast on the recipient of the
goods or services.
Reverse charge means the liability to pay tax is on the recipient of supply of goods or
services instead of the supplier of such goods or services in respect of notified
categories of supply [Section 2(98)].
It may be noted that the underlying principle of an indirect tax is that burden of tax
has to be ultimately passed on to the recipient. GST being an indirect tax, this principle
holds good for GST. Under normal circumstances, the statutory liability to deposit GST
and undertake compliances [i.e. to obtain registration under GST, deposit the tax with
the Government, filing returns, etc.] is on the supplier while he may recover the same
from its recipient. However, under reverse charge mechanism, the statutory liability to
deposit GST and undertaking compliance requirements, [i.e. to obtain registration under
GST, deposit the tax with the Government, filing returns, etc.] shifts from supplier to
recipient.

Goods and services notified under reverse charge mechanism

A). Supplies of goods taxable under reverse charge, i.e. supply of the goods
where tax is payable by the recipient: Goods like cashewnuts [not shelled/peeled],
bidi wrapper leaves, tobacco leaves and raw cotton (when supplied by an agriculturist to
any registered person), supply of lottery (when supplied by State Government, Union
Territory or any local authority to lottery distributor or selling agent), silk yarn (when
 CHARGE OF GST (Levy & Collection)
supplied by manufacturer of silk yarn to any registered person), used vehicles, seized
and confiscated goods, old and used goods, waste and scrap (when supplied by Central
Government, State Government, Union Territory or any local authority to any
registered person), priority sector lending certificate – when supplied by registered
person to any registered person, etc. are taxable under reverse charge.

B). Supply of services taxable under reverse charge under section 9(3) of the
CGST Act, i.e. the services where tax is payable by the recipient: the following
categories of supply of services wherein whole of the tax shall be paid on reverse
charge basis by the recipient of services:

Sno Category of supply of services Supplier of service Recipient of Service

1. Supply of services by a Goods Goods Transport (a)Any factory
Transport Agency (GTA) in respect of Agency (GTA) registered under or
transportation of goods by road to- governed by the
(a) any factory registered under or Factories Act, 1948;
governed by the Factories Act, or
1948; or (b)any society
(b) any society registered under registered under the
the Societies Registration Act, 1860 Societies
or under any other law for the time Registration Act,
being in force in any part of India; or 1860 or under any
(c) any co-operative society other law for the
established by or under any law; or time being in force in
(d) any registered person under the any part of India; or
CGST Act or the IGST Act or the (c )any cooperative
SGST Act or the UTGST Act; or society established
(e) any body corporate established, by by or under any law;
or under any law; or or
(f) any partnership firm whether (d)any person
registered or not under any law registered under the
including association of persons; or CGST Act or the
(g) any casual taxable person IGST Act or the
SGST Act or the
UTGST Act; or
(e)anybody corporate
established, by or
under any law; or
(f)any partnership
firm whether
registered or not
under any law
including association
of persons; or
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(g) any casual taxable
person;
located in the taxable
territory.
However, reverse charge mechanism (RCM) shall not apply to services provided by a GTA,
by way of transport of goods in a goods carriage by road to-
(a) a Department/ establishment of the Central Government/ State Government/ Union
territory; or
(b) local authority; or (c) Governmental agencies,
which has taken registration under the CGST Act only for the purpose of deducting tax
under section 51 (TDS) and not for making a taxable supply of goods or services.
Further, nothing contained in this entry shall apply where, -
i. the supplier has taken registration under the CGST Act, 2017 and exercised the option
to pay tax on the services of GTA in relation to transport of goods supplied by him under
forward charge; and
ii. the supplier has issued a tax invoice to the recipient charging CGST at the applicable
rates and has made the prescribed declaration on such invoice issued by him.
2. Services provided by an individual An individual Any business entity
advocate including a senior advocate advocate including located in the
or firm of advocates by way of legal a senior advocate taxable territory.
services, directly or indirectly. “Legal or firm of
service” means any service provided in advocates.
relation to advice, consultancy or
assistance in any branch of law, in any
manner and includes representational
services before any court, tribunal or
authority.
3. Services supplied by an arbitral An arbitral Any business entity
tribunal to a business entity. tribunal located in taxable
territory.

4. Services provided by way of Any person Any body corporate

sponsorship to any body corporate or or partnership firm
partnership firm. located in the
taxable territory
5. Services supplied by the Central Central Any business entity
Government, State Government, Union Government, located in the
territory or local authority to a State taxable territory
business entity excluding, - Government, Union
(1) renting of immovable property, and territory or local
(2) services specified below- authority
(i) services by the Department of
Posts and the ministry of railways
(Indian Railways);
(ii) services in relation to an aircraft
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or a vessel, inside or
outside the precincts of a port or an
airport;
(iii) transport of goods or passengers.
5A Services supplied by Central Central Any person
Government excluding ministry of Government, registered under
railways (Indian Railways), State State the CGST Act, 2017
Government, Union territory or local Government, Union
authority by way of renting of territory or local
immovable property to a person authority
registered under CGST Act, 2017
5AA Service by way of renting of Any person Any registered
residential dwelling to a registered person
person
6. Services supplied by a director of a A director of a
Company or a body
company/ body corporate to the said company or a body
corporate located in
company/body corporate. corporate the taxable
territory.
Tax on services supplied by director of a company in his personal capacity such as
renting of immovable property to the company/body corporate not payable under RCM

Tax on services supplied by director of a company/body corporate to the said company or

the body corporate is payable by the company/body corporate under reverse charge
mechanism (RCM).
It is hereby clarified that services supplied by a director of a company/body corporate to
the company/body corporate in his private/personal capacity such as services supplied by
way of renting of immovable property are not taxable under RCM.
Only those services supplied by director of company/body corporate, which are supplied by
him as or in the capacity of director of that company or body corporate shall be taxable
under RCM in the hands of the company or body corporate under Notification No. 13/2017
CT(R) (Sl. No. 6) dated 28.06.2017.
7. Services supplied by an insurance An insurance Any person carrying
agent to any person carrying on agent on insurance
insurance business. business, located in
the taxable
territory.
8. Services supplied by a recovery agent A recovery agent A banking
to a banking company or a financial company/financial
institution or a non-banking financial institution or a non-
company. banking financial
company, located in
the taxable
territory
9. Supply of services by a music Music composer, Music company,
composer, photographer, artist or the photographer, producer or the
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like by way of transfer or permitting artist, or the like like, located in the
the use or enjoyment of a copyright taxable territory.
covered under section 13(1)(a) of the
Copyright Act, 1957 relating to
original dramatic, musical or artistic
works to a music company, producer
or the like.
9A Supply of services by an author by Author Publisher located in
way of transfer or permitting the use the taxable
or enjoyment of a copyright covered territory.
under section 13(1)(a) of the
Copyright Act, 1957 relating to
original literary works to a publisher.
However, an author can choose to pay tax under forward charge if-
(a) he has taken registration under the CGST Act and filed a declaration, in the
prescribed form, that he exercises the option to pay CGST on the said service
under forward charge in accordance with section 9(1) and to comply with all the
provisions as they apply to a person liable for paying the tax
(b) he makes a declaration on the invoice issued by him in prescribed form to the
publisher.
10. Supply of services by the members of Members of RBI
Overseeing Committee to Reserve Overseeing
Bank of India (RBI) Committee
constituted by
the RBI
11. Services supplied by individual Direct Individual Direct A banking company
Selling Agents (DSAs) other than a Selling Agents or a NBFC, located
body corporate, partnership or (DSAs) other than in the taxable
limited liability partnership (LLP) firm a body corporate, territory.
to bank or non-banking financial partnership or LLP
company (NBFCs). firm
12. Services provided by business Business A banking company,
facilitator to a banking company. facilitator located in taxable
territory
13. Services provided by an agent of An agent of A business
business correspondent to business business correspondent,
correspondent. correspondent located in the
taxable territory.
14. Security services (services provided Any person other A registered
by way of supply ofsecurity personnel) than a body person, located in
provided to a registered person. corporate the taxable
However, nothing contained in this territory.
entry shall apply to:
(i) (a) a Department or Establishment
of the Central Government or State
 CHARGE OF GST (Levy & Collection)
Government or Union territory; or
(b) local authority; or
(c) Governmental agencies; which has
taken registration under the CGST
Act, 2017 only for the purpose of
deducting tax under section 51 of the
said Act and not for making a taxable
supply of goods or services; or
(ii) a registered person paying tax
under composition scheme.
15. Services provided by way of renting Any person, other Any body corporate
of any motor vehicle designed to than a body located in the
carry passengers where the cost of corporate who taxable territory.
fuel is included in the consideration
supplies service to
charged from the service recipient, a body corporate
provided to a body corporate. & doesn’t issue an
invoice charging
CGST @ 6% to
service recipient.
16. Services of lending of securities Lender i.e., a Borrower i.e., a
under Securities Lending Scheme, person who person who borrows
1997 (“Scheme”) of Securities and deposits the securities under
Exchange Board of India, as amended securities the Scheme through
registered in his an approved
name/in the name intermediary of
of any other SEBI.
person duly
authorised on his
behalf with an
approved
intermediary for
the purpose of
lending under
Scheme of SEBI
For purpose of the notification notifying the above services under reverse charge
mechanism, following explanations shall apply-

(a) The person who pays or is liable to pay freight for the transportation of goods
by road in goods carriage, located in the taxable territory shall be treated as
the person who receives the service for the purpose of this notification.
(b) Body Corporate: has the same meaning as assigned to it in clause (11) of section
2 of the Companies Act, 2013.
As per section 2(11) of the Companies Act, 2013, body corporate or corporation
includes a company incorporated outside India, but does not include—
 CHARGE OF GST (Levy & Collection)
(i) a co-operative society registered under any law relating to co-operative
societies; and
(ii) any other body corporate (not being a company as defined in this Act), which
the Central Government may, by notification, specify in this behalf.
(c) the business entity located in the taxable territory who is litigant, applicant or
petitioner, as the case may be, shall be treated as the person who receives the
legal services for the purpose of this notification.
(d) the words and expressions used and not defined in reverse charge notification
but defined in the CGST Act, the IGST Act, and the UTGST Act shall have the
same meanings as assigned to them in those Acts.
(e) Limited Liability Partnership formed and registered under the provisions of the
Limited Liability Partnership Act, 2008 shall also be considered as a partnership
firm or a firm.
(f) Insurance agent means an insurance agent licensed under section 42 of the
Insurance Act, 1938 who receives agrees to receive payment by way of
commission or other remuneration in consideration of his soliciting or procuring
insurance business including business relating to the continuance, renewal or
revival of policies of insurance [Section 2(10) of the Insurance Act, 1938].
(g) Renting of immovable property means allowing, permitting or granting access,
entry, occupation, use or any such facility, wholly or partly, in an immovable
property, with or without the transfer of possession or control of the said
immovable property and includes letting, leasing, licensing or other similar
arrangements in respect of immovable property.
(h) the provisions of reverse charge notification, in so far as they apply to the
Central Government, State Government, shall also apply to the Parliament and
State Legislature, Courts and Tribunals.

PERSON LIABLE TO PAY GST ON GTA SERVICE

 CHARGE OF GST (Levy & Collection)

Note - Where recipient is other than the specified recipients (Unregistered

individual end consumer or unregistered casual taxable person), GST will be exempt.

PERSON LIABLE TO PAY TAX UNDER RENTING OF MOTOR VEHICLE

SERVICE

It is important to note here that when any service is placed under RCM, the supplier
shall not charge any tax from the service recipient as this is the settled procedure
under RCM. Thus, the notification specifies that RCM is applicable here only when
the supplier does not issue an invoice charging GST @12% (6% CGST+6%
SGST/UTGST or 12% IGST) from the service recipient.

Now there may arise a doubt as to whether RCM is applicable on:

 CHARGE OF GST (Levy & Collection)
(i) service of renting of motor vehicle designed to carry passengers or

(ii) service of transportation of passengers.

It is clarified that there is a clear distinction between the two services which is as
under:

A. The two services fall under two different headings in the Tariff.

B. (i) Services of renting of motor vehicles designed to carry passengers covers:

• renting of motor vehicle

• for transport of passengers

• for a period of time

• where the renter defines how and when the vehicles will be operated, determining
schedules, routes and other operational considerations.

(ii) ‘Passenger transport services’ covers passenger transport services over pre-
determined routes on pre-determined schedules.

Accordingly, where the body corporate hires the motor vehicle (for transport of
employees etc.) for a period of time, during which the motor vehicle shall be at the
disposal of the body corporate, the service would fall under ‘services of renting of
motor vehicles designed to carry passengers’, and the body corporate shall be liable to
pay GST on the same under RCM.

Thus, reverse charge would apply on act of renting of vehicles by body corporate and in
such a case, it is for the body corporate to use in the manner as it likes subject to
agreement with the person providing vehicle on rent.

However, where the body corporate avails the passenger transport service for specific
journeys or voyages and does not take vehicle on rent for any particular period of time,
the service would fall under ‘passenger transport services’ and the body corporate shall
not be liable to pay GST on the same under RCM.

TAX PAYABLE BY THE ECO ON NOTIFIED SERVICE :

Electronic Commerce Operator (ECO) is any person who owns/operates/manages an

electronic platform for supply of goods/services/both.

Sometimes, ECO itself supplies the goods or services or both through its electronic
portal. However, many a times, the products/services displayed on the electronic portal
are actually supplied by some other person to the consumer.
 CHARGE OF GST (Levy & Collection)
the following categories of services supplied through ECO for this purpose –

(a) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab,

motor cycle, omnibus or any other motor vehicle;

(b) services by way of providing accommodation in hotels, inns, guest houses, clubs,
campsites or other commercial places meant for residential or lodging purposes, except
where the person supplying such service through electronic commerce operator is liable
for registration under section 22(1) of the CGST Act.

(c) services by way of house-keeping, such as plumbing, carpentering etc, except where
the person supplying such service through electronic commerce operator is liable for
registration under sub-section 22(1) of the CGST Act.

(d) supply of restaurant service other than the services supplied by restaurant, eating
joints etc. located at specified premises.

‘Specified premises’ would mean premises providing hotel accommodation service having
declared tariff of any unit of accommodation above Rs. 7,500 per unit per day or
equivalent.

Tax on above services supplied through ECO shall be paid by the ECO. All the provisions
of the CGST/IGST Act shall apply to such ECO as if he is the supplier liable for paying
the tax in relation to the supply of above services.
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In this regard, following issues have been clarified:

(i) ECOs not to collect TCS in respect of restaurant services so notified ECOs will no
longer be required to collect TCS (Tax Collected at Source) and file Form GSTR-8 in
respect of restaurant services on which it pays tax in terms of section 9(5).

(ii) ECOs not required to take separate registration for paying tax on restaurant
service supplied through them As ECOs are already registered in accordance with rule
8 (as a supplier of their own goods or services), there would be no mandatory
requirement of taking separate registration by ECOs for payment of tax on restaurant
service under section 9(5).

(iii) ECO to pay tax on any restaurant services supplied through them ECOs will be
liable to pay GST on any restaurant service supplied through them including services
supplied by an unregistered person.

(iv) Supply of restaurant services to be included in aggregate turnover of person

supplying restaurant services through ECO

It is clarified that the aggregate turnover of person supplying restaurant service

through ECOs shall be computed in accordance with definition of aggregate turnover
under section 2(6) and shall include the aggregate value of supplies made by the
restaurant through ECOs. Accordingly, for threshold consideration or any other
purpose in the CGST Act, the person providing restaurant service through ECO shall
account for such services in his aggregate turnover.

(v) Restaurant services provided through ECO not to be considered as inward supply for
ECOs liable to RCM

ECOs are not the recipient of restaurant service supplied through them. Since these
are not input services to ECO, these are not to be reported as inward supply (liable to
reverse charge) in Form GSTR-3B.

(vi) Reversal of proportionate ITC on input goods and services not required by ECO

ECOs provide their own services as an electronic platform and as an intermediary for
which it would acquire inputs/input service on which ECOs avail input tax credit (ITC).
The ECO charges commission/fee etc. for the services it provides. The ITC is utilised
by ECO for payment of GST on services provided by ECO on its own account (say, to a
restaurant). The situation in this regard remains unchanged even after ECO is made
liable to pay tax on restaurant service. ECO would be eligible to ITC as before.
Accordingly, it is clarified that ECO shall not be required to reverse ITC on account of
restaurant services on which it pays GST in terms of section 9(5). It may also be noted
 CHARGE OF GST (Levy & Collection)
that on restaurant service, ECO shall pay the entire GST liability in cash (No ITC could
be utilised for payment of GST on restaurant service supplied through ECO).

(vii) GST to be paid by the supplier on services not notified under section 9(5) of CGST
Act but supplied through ECO In respect of supplies not notified under section 9(5)
but supplied through ECO, the liability to pay GST continues on such supplier and ECO
shall continue to deposit TCS on such supplies.

(viii) ECO to raise invoice in respect of restaurant service supplied through ECO The
invoice in respect of restaurant service supplied through ECO under section 9(5) will be
issued by ECO.

(ix) Billing in case of ‘restaurant service’ and goods/services other than restaurant
service being sold by a restaurant to a customer under the same order There can a
situation where ‘restaurant service’ and goods or services other than restaurant
service are sold by a restaurant to a customer under the same order. The question
arises as to who shall be liable for raising invoices in such cases.

Considering that liability to pay GST on supplies other than ‘restaurant service’ through
the ECO, and other compliances under the CGST Act, including issuance of invoice to
customer, continues to lie with the respective suppliers (and ECOs being liable only to
collect tax at source (TCS) on such supplies), it is advisable that ECO raises separate
bill on restaurant service in such cases where ECO provides other supplies to a
customer under the same order.

Applicability of GST in real estate sector :

The effective rate of GST on real estate sector for the new projects by promoters
are as follows:
(i) 1% without ITC on construction of affordable houses (area 60 sqm in metros/ 90
sqm in non-metros and value upto Rs. 45 lakh).
(ii) 5% without ITC is applicable on construction of:
(a) all houses other than affordable houses, and
(b) commercial apartments such as shops, offices etc. in a residential real estate
project (RREP) in which the carpet area of commercial apartments is not more than
15% of total carpet area of all apartments.
Conditions: Above tax rates shall be available subject to following conditions: (a) ITC
shall not be available. (b) 80% of inputs and input services [other than services by way
of grant of development rights, long term lease of land (against upfront payment in the
form of premium, salami, development charges etc.) or FSI (including additional FSI),
electricity, high speed diesel, motor spirit, natural gas], used in supplying the service
shall be purchased from registered persons.
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GST Rates of goods :

Broadly, six rates of CGST have been notified in six Schedules of rate notification for
goods, viz., 0.125%, 1.5%, 2.5%, 6%, 9% and 14%. SGST/ UTGST at the equivalent rate
is also leviable. With regard to IGST, broadly six rates have been notified in six
Schedules of rate notification for goods, viz., 0.25%, 3%, 5%, 12%, 18% and 28%.
Certain specified goods have been exempted from tax.

GST Rates of services :

Broadly, six rates of CGST have been notified for services, viz., 0.75%, 2.5%, 3.75%,
6%, 9% and 14%21. Equivalent rate of SGST/ UTGST will also be levied. For IGST, six
rates have been notified for services, viz., 1.5%, 5%, 7.5%, 12%, 18% and 28%2223. For
certain specified services, nil rate of tax has been notified.

COMPOSITION LEVY [SECTION 10 OF THE CGST ACT]

• Voluntary & optional Scheme (For goods & Restaurant service)
• If Aggregate Turnover doesn’t exceed Rs. 1.5 crore (75 Lakhs for special
category state) in Preceding financial Year.
May Opt to pay tax @Specified rate

✔✔ Special Category State :

Arunachal , Manipur , Sikkim, uttarakhand, Mizoram, Meghalaya, Tripura, Nagaland

Applicable T/o Limit = 75 Lakhs

If Taxpayer is registered in more than one state, Lower limit will be applicable.

Composition Scheme u/s 10(2A) – for services

If Aggregate T/o Does not exceed Rs.50 Lakhs = Tax @ Specified rate
Composition taxpayer can not make inter state supply.

Specified Rate :
Manufacturer = (0.5% + 0.5%) of T/o of state
Restaurant Service = (2.5% + 2.5%) of T/o of state
Any other (i.e. trader) = (0.5% + 0.5%) of taxable supplies
Service Providers = (3%+3%) of T/o in state

Non – eligibility for Composition Scheme :

 CHARGE OF GST (Levy & Collection)
1. he is engaged in making any supply of goods or services which are not leviable to
tax under this Act
2. he is engaged in making any inter-State outward supplies of goods or services
3. he is 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;
4. Engaged in manufacturing of notified goods, i.e. ice cream, pan masala, tobacco,
aerated waters, fly ash bricks; fly ash aggregate, fly ash blocks, bricks of fossil
meals or similar siliceous earths, building bricks, earthen or roofing tiles.
5. he is either a casual taxable person nor a non-resident taxable person.
6. Exceed the threshold limit for composition scheme.
7. Person Opted for Composition scheme of goods and also supply of service other
than restaurant service exceeding
10% of t/o in state in preceding F.Y. OR Rs. 500000
(Whichever is higher)

Additional Points : -
1. Can not claim Input Tax Credit (ITC)
2. Issues Bill of supply instead of Tax invoice
3. Intimate to govt within 7 days of any kind of change of failure of condition.