Section 10 - Composition levy.

THE CENTRAL GOODS AND SERVICES TAX ACT, 2017

Rule 5 - Conditions and restrictions for composition levy

Central Goods and Services Tax Rules, 2017

As per Section 10(2),five categories of registered person are not eligible to opt for the composition scheme. These are:

(i) supplier of services other than supplier of restaurant service;

(ii) supplier of goods which are not taxable under the CGST Act/SGST Act/UTGST Act.

(iii) an inter-State supplier of goods;

(iv) person supplying goods through an electronic commerce operator;

(v) manufacturer of certain notified goods.

In addition, Rule 5 specified further category of persons who are not eligible for availing benefit of composition scheme.

Further as per Notification No. 08/2017 - Dated: 27-6-2017 a person manufacturing the following specified goods shall not be eligible for availing the benefit of composition scheme. 

TABLE

S. No.	Tariff item, sub-heading, heading or Chapter	Description
(1)	(2)	(3)
1.	2105 00 00	Ice cream and other edible ice, whether or not containing cocoa.
2.	2106 90 20	Pan masala
3.	24	All goods, i.e. Tobacco and manufactured tobacco substitutes

 

 

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.