Input Tax Credit denial: purchases from composition taxpayers are ineligible for ITC under the GST regime.
A composition scheme taxpayer is excluded from the input tax credit chain, cannot issue a tax invoice or collect tax, and must state that no credit is available. Consequently, a registered person purchasing from a composition dealer cannot claim Input Tax Credit because the supplier does not charge GST in a manner that would enable the recipient to treat the payment as tax paid for ITC purposes.

Composition scheme threshold triggers monthly tax payment and monthly returns requirement for the affected taxpayer.
A taxpayer under the Composition Scheme may pay and file on the quarterly schedule (guidance noting payment on the 18th and quarterly return on the 18th after quarter-end). If the taxpayer crosses the threshold or withdraws from composition, they become a regular taxable person and must pay tax and furnish returns monthly by the 20th of the following month for the remainder of the financial year and subsequent years.

GST payment due date: monthly filers pay with next-month return; composition filers pay with quarterly return.
Tax under GST must be paid not later than the return's due date. Monthly filers must file GSTR-3 and pay tax by the twentieth day of the month following the tax month. Composition taxpayers under the composition scheme file quarterly in GSTR-4 and must pay tax by the eighteenth day after the quarter ends.

Composition levy on exempt supplies raises eligibility ambiguity due to turnover inclusion versus ineligibility for non leviable supplies.
The composition levy's tax base, as defined by turnover, expressly includes exempt supplies, indicating that composition tax is payable having regard to exempted goods; however, Section 10(2)(b) disqualifies persons making supplies "not leviable to tax," creating an ambiguity whether exempt supplies (which definitionally includes nil rated and wholly exempt supplies and non taxable supplies) render a person ineligible for composition. Commentators note this tension and call for clarification or amendment to reconcile the turnover inclusion with the eligibility restriction.

Eligibility for composition scheme may be barred by prior inter state supplies, even if current turnover is below threshold.
A registered person who made inter state supplies during the previous year is ineligible to opt for the composition scheme in the current year, because eligibility under Section 10 is determined with reference to the preceding financial year; thus the absence of inter state supplies must be assessed for the previous year even if turnover remains below the threshold.

Composition scheme eligibility: turnover in preceding financial year determines entitlement; aggregate turnover is all-India and fresh declaration required.
Eligibility for the composition scheme depends on aggregate turnover in the preceding financial year not exceeding the prescribed threshold; aggregate turnover is computed on an all India basis and includes taxable supplies (excluding inward reverse charge supplies), exempt supplies, exports and inter State supplies by the same PAN, while excluding GST and cess. Eligibility is reassessed each year; a fresh declaration is required to opt into the scheme after becoming eligible.

Composition scheme: importers may remain in composition though IGST on imports may not yield input tax credit, service providers excluded.
Importers can opt for the composition scheme where otherwise eligible; there is no categorical bar on importers availing composition levy. IGST is payable on import and such tax may not yield input tax credit for a composition taxpayer. Pure service providers remain ineligible for composition, and importing services for business or captive consumption does not automatically make a person a service provider or disqualify composition eligibility.

Composition scheme eligibility: exporters cannot use composition tax where their supplies are treated as inter State, barring such option.
Exports are treated as inter State supplies for GST purposes. The composition levy prohibits a taxpayer from making inter State outward supplies of goods while paying tax under the composition scheme. Therefore, an exporter whose transactions are classified as inter State supplies cannot opt to pay tax under the composition scheme in respect of those export supplies.

Composition scheme ineligibility: manufacturers of ice cream, pan masala and tobacco and certain suppliers cannot opt.
Section 10(2) excludes five categories from the composition scheme: suppliers of services (except restaurant services), suppliers of non taxable goods, inter State suppliers, persons supplying through electronic commerce operators, and manufacturers of notified goods. Rule 5 adds further ineligible classes. A notification further specifies that manufacturers of ice cream, pan masala, and all tobacco and manufactured tobacco substitutes are not eligible for composition levy.

Composition scheme lapse triggers transition to regular tax liability and requires issuing tax invoices and filing withdrawal notice promptly.
Crossing the aggregate turnover threshold causes the composition option to lapse from the day the threshold is exceeded; the person is liable to pay tax under section 9 from that day and must issue tax invoices for every taxable supply made thereafter. The person must also file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of the occurrence of such event.

Composition scheme eligibility may be available for suppliers using e-commerce operators while TDS/TCS provisions remain inoperative.
Eligibility for the composition scheme is negated for suppliers making supplies through an electronic commerce operator required to collect tax at source; however, because the TDS/TCS provisions are not yet operative and ECOs are not required to collect tax, suppliers using ECOs may currently opt for the composition scheme until the collection provisions are brought into force, and an administrative clarification from the government is recommended to remove uncertainty.

Composition scheme prohibits inter state outward supplies, triggering immediate withdrawal and normal GST liability if violated.
A registered person availing the composition scheme cannot make inter state outward supplies; place of supply outside the state requires issuance of a Bill of Supply only, and an inter state supply triggers immediate withdrawal of the composition scheme by operation of law. Withdrawal converts liability to tax under normal provisions, requires filing FORM GST CMP-04 electronically, and exposes the person to additional tax and penalty determination by the proper officer if composition was wrongly availed.