Composition scheme

[RAI SINGH]

A person having shopand selling few products are nontaxable and some taxable. whether he can opt composition scheme.previous financial year Turnover is ₹ 35 Lakhs.

[RAMESH PRAJAPATI]

The registered person shall be eligible to opt to pay tax under composition scheme [under 10(1) of the CGST Act], 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 [Para 6. (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.]

(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.

[KASTURI SETHI]

As per FAQ NOT eligible for composition scheme. See (e) below:

Q4. Who are the persons not eligible for composition scheme?

Ans. Following persons are not allowed to opt for the composition scheme :

(a) a casual taxable person or a non-resident taxable person;

(b) suppliers whose aggregate turnover in the preceding financial year crossed ` 75 lakhs;

(c) supplier who has purchased any goods or services from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;

(d) supplier of services, other than restaurant service;

(e) persons supplying goods which are not taxable under GST law;

(f) persons making any inter-State outward supplies of goods;

(g) suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under Section 52; and

[Himansu Sekhar]

Yes he can opt for the composition scheme. The total turnover will include both taxable and non taxable. A condition he may remember is that he should not have any stock purchased from interstate while opting for composition scheme.

[RAI SINGH]

Thanks Sir.

[Himansu Sekhar]

OK sir

AI Summary

Composition scheme eligibility limited by nature of supplies and interstate/e-commerce restrictions, with turnover-based lapse and no input credit. Eligibility for the composition scheme requires that the taxable person not supply services except certain restaurant/food services, not supply goods that are non-taxable, not make inter-State outward supplies, not use e-commerce operators required to collect TCS, and not be a manufacturer of notified goods; the option lapses if aggregate turnover exceeds the statutory limit, opt-in is by all registrants sharing a PAN, and a composition dealer may not collect tax or claim input tax credit and faces tax determination and penalties if ineligible.