LEVY AND COLLECTION [SECTION 9]

• Levy and collection [Section 9(1)]

Subject to provisions of Section 9(2)
• There shall be levied a tax called the Central goods and services tax
• on all intra-State supplies of goods or services or both,
• except on the supply of alcoholic liquor for human consumption,
• on the value determined under section 15 and at such rates,
• not exceeding twenty per cent.,
• as may be notified by the Government
• on the recommendations of the Council and
• collected in such manner as may be prescribed and
• shall be paid by the taxable person.
Levy on Petroleum Products [Section 9(2)]
• The Central tax on the supply of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas and aviation turbine
fuel, shall be levied with effect from such date as may be notified by the
Government on the recommendations of the Council.

Reverse charge on notified goods or services or both

[Section 9(3)]
• The Government may, on the recommendations of the Council, by
notification, specify categories of supply of goods or services or both, the
tax on which shall be paid on reverse charge basis by the recipient of such
goods or services or both and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying the tax in relation to
the supply of such goods or services or both.
Reverse charge in case of taxable supply by
unregistered supplier to registered supplier
[Section 9(4)]
• The Central tax in respect of the supply of taxable goods or services
or both by a supplier, who is not registered, to a registered person
shall be paid by such person on reverse charge basis as the recipient
and all the provisions of this Act shall apply to such recipient as if he
is the person liable for paying the tax in relation to the supply of
such goods or services or both.
Tax to be paid by E-commerce operator in
respect of notified services [Section 9(5)]
• The Government may, on the recommendations of the Council, by
notification,
• specify categories of services the tax on intra-State supplies of which
shall be paid by the electronic commerce operator
• if such services are supplied through it, and
• all the provisions of this Act shall apply to such electronic commerce
operator as if he is the supplier liable for paying the tax in relation to
the supply of such services:
• If ECO- does not have a physical presence in the taxable territory: by
any person representing such ECO
• If no physical presence and no representative in the said territory:
ECO shall appoint a person in the taxable territory
COMPOSITION LEVY [SECTION 10]
• Alternative method of levy
• Designed for small taxpayers
• Objective: to bring simplicity and to reduce the compliance cost for
the small taxpayers
• Optional
• Person opting: can pay tax at a prescribed percentage of his turnover
every quarter, instead of normal rates
• Mandatory conditions: limit of annual turnover
Eligibility for composition scheme [Section
10(1)]
• Notwithstanding anything to the contrary contained in this Act
• but subject to the provisions of sub-sections (3) and (4) of section 9,
• a registered person, whose aggregate turnover in the preceding financial
year did not exceed fifty lakh rupees may opt to pay,
• in lieu of the tax payable by him, an amount calculated at such rate as
may be prescribed, but not exceeding
• Manufacturer: 1% of the turnover in State
• Restaurant Services: 2.5%:of the turnover in State and
• Other suppliers: ½% of the turnover in State
subject to such conditions and restrictions as may be prescribed:
Provided that the Government may, by notification, increase the said limit
of fifty lakh rupees to such higher amount, not exceeding one crore rupees,
as may be recommended by the Council.
Notification No. 8/2017-Central Tax
• Fifty lakh rupees increased to seventy five lakh rupees by
• For special 9 States: limit remained 50 lakhs rupees
• 3 products on which Composition Levy shall not apply
- Ice cream and other edible ice, whether or not containing cocoa.
- Pan masala
- All goods, i.e. Tobacco and manufactured tobacco substitutes
Notification No. 46/2017- Central Tax
• Seventy-five lakh rupees increased to 1 crore rupees
• Fifty lakh rupees increased to seventy-five lakh rupees (in respect of 9 States

Notification No. 1/2018- Central Tax

• Manufacturing: one per cent reduced to half per cent
• Other supplies: “half per cent. of the turnover” changed to “half per cent. of the
turnover of taxable supplies of goods”

Notification No. 05/2019 – Central Tax

• In the said notification, for the portion beginning with the words “an amount
calculated at the rate of” and ending with the words “half per cent. of the
turnover of taxable supplies of goods in State in case of other suppliers”, the
words and figures, “an amount of tax calculated at the rate specified in rule 7 of
the Central Goods and Services Tax Rules, 2017:” shall be substituted.
Conditions to be fulfilled for opting
composition scheme [Section 10(2)]
• The registered person shall be eligible to opt under Section 10(1), 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; (i.e. supplier of restaurant service)
(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.
• Note:- Government has notified manufactures of Ice Creams, Pan Masala, tobacco and
tobacco substitutes. [Notification No. 8/2017-CT dated 19-06-2017 w.e.f 22-06-2017]
• 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 Section 10(1) unless all such registered persons opt
to pay tax under that sub-section.
Composition Scheme option to lapse if aggregate turnover
exceeds limit specified under Section 10(1) [Section 10(3)]
• The option availed of by a registered person under Section 10(1)
shall lapse with effect from the day on which his aggregate turnover
during a financial year exceeds the limit specified under Section
10(1).
Person opting composition scheme cannot collect tax and
not entitled to claim ITC [Section 10(4)]
• A taxable person to whom the provisions of Section 10(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.
Penal provisions [Section 10(5)]
• If the proper officer has reasons to believe that a taxable person has
paid tax under Section 10(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.
Other important points
• Bill of supply instead of Tax invoice.
• They are also not entitled to take input tax credit.
• A registered taxable person having same PAN and multiple
registrations in different states have to opt for the composition
scheme for all states.
• Composition scheme is not applicable for tax payment under reverse
charge mechanism.
• Customer cannot claim ITC in respect of purchases from person
covered by composition scheme.
Computation of Aggregate Turnover
• As per Section 2(6) of the CGST/SGST Act, 2017, "Aggregate turnover"
means the aggregate value of all taxable supplies(excluding the value of
inward supplies on which tax is payable by a person on reverse charge
basis), exempt supplies, exports of goods or services or both and inter-
State supplies of persons having the same Permanent Account Number, to
be computed on all India basis but excludes central tax, State tax, Union
territory tax, integrated tax and cess.
• Intra State Supplies made under forward charge
• Intra State Supplies made which are which are chargeable to GST at Nil
rate
• Intra state Supplies which are wholly exempt under section 11 of
CGST/SGST Act, 2017-
• Value of inward supplies on which tax payable under RCM
Other suggested reading
• Composition Levy Rules
• Rule 3: Intimation for Composition Levy
• Rule 4: Effective Date for composition Levy
• Rule 5 &6: Conditions and Restrictions
• Rule 7: Rates of tax for Composition Levy