CGST §10 — Composition scheme (turnover limit + rates)

A supplier with aggregate turnover up to ₹1.5 CRORE (₹75 lakh in special-category states) can opt for the COMPOSITION SCHEME: 1% for traders/manufacturers, 5% for restaurants. A separate §10(2A) scheme covers SERVICE / mixed suppliers up to ₹50 LAKH aggregate turnover at 6%. Composition dealers cannot claim ITC, cannot make inter-state outward supplies, and issue a Bill of Supply.

Key points

• §10(1) lets a registered person whose AGGREGATE TURNOVER in the preceding FY did not exceed ₹1.5 CRORE (₹75 LAKH for special-category states — Arunachal, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand) opt to pay tax at a flat rate of TURNOVER: (a) 1% (0.5% CGST + 0.5% SGST) for MANUFACTURERS and TRADERS — for traders the 1% is on turnover of TAXABLE supplies only;
• (b) 5% (2.5%+2.5%) for RESTAURANT / catering (supply of food, non-alcoholic).
• §10(2A) provides a PARALLEL composition for SUPPLIERS OF SERVICES (or mixed goods+services) NOT eligible under §10(1), with aggregate turnover up to ₹50 LAKH in the preceding FY, at 6% (3%+3%).
• CONDITIONS for all composition dealers: NOT engaged in inter-state OUTWARD supply;
• NOT supplying through an e-commerce operator required to collect TCS;
• NOT a supplier of goods/services not leviable to GST;
• NOT a manufacturer of notified goods (ice-cream, pan masala, tobacco, aerated water);
• CANNOT collect tax from customers and CANNOT claim INPUT TAX CREDIT;
• must issue a BILL OF SUPPLY (not a tax invoice) and display 'composition taxable person' on signboard / bills.
• RETURNS: quarterly payment in FORM CMP-08 and an annual return in FORM GSTR-4.
• Opt-in via CMP-02.
• The limit applies PAN-wide across all GSTINs of the same person.

Reference: §10 CGST Act 2017 read with Rules 3-7 & Notification 2/2019-CT(R)