Optional Scheme
Tax payment under this scheme is an option available to the taxable person. This scheme is is available only to certain eligible taxable persons.
Eligible Turn Over
- A registered person, whose aggregate turnover in preceding financial year did not exceed Rs 1.5 cr will be eligible to opt for payment tax under the composition scheme.
- However, the aggregate turnover in preceding financial year shall be 75 Lakhs in the case of special category states which is specify below
- Arunachal Pradesh
- Mizoram
- Tripura
- Manipur
- Nagaland
- Uttarakhand
- Meghalaya
- Sikkim
- For the state Assam, Himachal Pradesh and Jammu and Kashmir, the turnover limit will be Rs 1.5 Crore.
Aggregate Turnover
Aggregate Turnover means value of turnover of person having Same Permanent Account Number computed on all India basis Which is includes
- All taxable supplies excluding the value of inward supplies on which is tax payable by a person
- on reverse charge basis
- Exempted Supplies
- Export of goods or services or both and
- Interstate supplies
But excludes followings
- Central Tax
- State Tax
- Union territory tax
- Integrated Tax and
- Cess
Computation of Aggregate Turnover for Purpose of Eligible Limit
For the purpose 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 April of financial year up to the date when he becomes liable for registration under this Act.
- But shall not include the value of exempt supply of service provided by way of interest or discount
Scheme applicable to Goods and restaurant services
The composition levy is available to the supplier of goods and restaurant service. but composition suppliers are permitted to supply services up to a specified marginal value in the year of option for composition. It must be noted that a taxable person cannot opt for payment of tax under composition scheme say for supply of class of goods and services and opt for regular scheme of payment of taxes for supply of other classes of goods and service.
Tax Rates under the Composition Scheme
| Elibile Persons | CGST | SGST | TOTAL TAX RATE |
| Manufacturer | 0.5% Of Turnover in State or Union territory | 0.5% Of Turnover in State or Union territory | 1% Of Turnover in State or Union territory |
| Restaurant Service | 2.5% Of Turnover in State or Union territory | 2.5% Of Turnover in State or Union territory | 5% Of Turnover in State or Union territory |
| Other Supplier | 0.5% Of Taxable Supplies in state or Union territory | 0.5% Of Taxable Supplies in state or Union territory | 1% Of Taxable Supplies in state or Union territory |
Services can Supplied by Composition Suppliers
A person who opts to pay tax under (a) or clause (b) or clause (c) may supply of services (other than those referred to in clause (b) of paragraph 6 of Schedule II i.e restaurant services of value
- Not exceeding 10% of turnover in a state or union territory in the preceding financial year (or)
- Rs: 5,00,000
Whichever is lower.
Example
Santosh is engaged in supply of goods. His aggregate turnover in preceding financial year is Rs: 110 lakh since his aggregate turnover in the preceding financial year does not exceed Rs 1.5cr , he is eligible for composition scheme in current financial year. Further, in current financial year, he can supply services up to a value of not exceeding
- 10% of Rs 110 Lakh, i.e 11 lakh (Or)
- 5 lakh
Whichever is higher. Thus, he can supply services up to a value of Rs: 11,00,000 in current financial year. If the value of services supplied exceeds Rs: 11,00,000, he became ineligible for composition scheme and has to opt out of the composition scheme.
Explanation
Turnover in State or Turnover in Union Territory
Turnover in State or Turnover in Union Territory 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) and exempt supplies made within a state or union territory by a taxable person, export of goods or services or both and inter-state supplies of goods or services or both made from the state or union territory by the said taxable person but exclude central tax, state tax, union territory tax, Integrated Tax and Cess.
