REVISED THRESHOLD LIMIT FOR COMPOSITION LEVY

[As per discussions in the 16th GST Council Meeting held on 11th June, 2017]

Sub section (1) of section 10 read with sub-section (2) of the same section of the Central Goods and Services Tax Act, 2017 [CGST Act] provides that an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed ₹ 50 lakh, may opt to pay, in lieu of the tax payable by him, an amount calculated at the rate of:

1.  1% of turnover in State or turnover in Union Territory in case of a manufacturer;

2.  2.5% of turnover in State or turnover in Union Territory in case of persons engaged in making supplies referred to in Paragraph 6(b) of Schedule II to the CGST Act; and

3.  0.5% of turnover in State or turnover in Union Territory in case of other suppliers.

2. The said sub-section also provides that the said limit may be increased upto ₹ 1 crore on the recommendations of the GST Council.

3. The GST Council, in its meeting held on 11th June, 2017, has recommended increase in the aforesaid turnover limit for Composition Levy for CGST and SGST purposes from ₹ 50 lakh to ₹ 75 lakh in respect of all eligible registered persons, referred to in the aforesaid subsection. However, whether the same increased turnover limit for Composition levy will apply in case of Special Category States or not will be decided in the next GST Council meeting.

Composition scheme threshold increased for eligibility, expanding who may opt for composition levy under CGST provisions. An eligible registered person may opt for a composition levy where aggregate turnover in the preceding financial year does not exceed the statutory threshold; composition payment rates are prescribed by supplier category. The GST Council has recommended increasing the aggregate-turnover threshold for composition levy eligibility for Central and State GST purposes, but the applicability of the revised threshold to Special Category States is to be decided later.