Page 6 - Chap3 Composition Levy

Ü Further, tax payable @ 5% (2½% CGST+ 2½% SGST) of the turnover in the State by Shubhlaxmi Foods in the
financial year 20YY-ZZ is as follows:
= 5% of ` 1,40,00,000 [` 1,30,00,000 + ` 10,00,000] [(Bank interest of ` 30 lakh from the fixed deposits is not
considered while computing turnover in State for determining the tax payable under composition scheme)].
= ` 7,00,000 [CGST = ` 3,50,000 and SGST = ` 3,50,000].

Sec 10(1) read with Proviso to sec 10(2):- Applicability to all Registrations under same PAN

Q.4: MN Ltd. has two registered places of business in the State of Haryana. Its aggregate turnover during
the financial year 20XX-YY was ` 62 lakh. It wishes to opt for composition levy under sub-sections (1) and
(2) of section 10 for one of the place of business in the financial year 20YY-ZZ and wants to continue with
registration under regular scheme and pay taxes at the normal rate for the other place of business. Both the
places of business are having the same Permanent Account Number issued under the Income-tax Act, 1961.
Can MN Ltd. do so? Explain with reason. [Study Mat]
Answer: Legal Provision:-
Ü As per proviso to section 10(2) of CGST Act, 2017, All registered persons having the same Permanent Account
Number (PAN) have to opt for composition scheme u/s 10(1). If any of them opts for normal scheme, then all
such other persons also become ineligible for composition scheme.
Discussion & Conclusion:-
Ü In the given case, since MN Ltd. has two places of business (they are not separate entities under the
Income-tax Act, 1961), they would be registered under the same PAN.
Ü Therefore, MN Ltd. cannot opt for composition levy for only one of the places of business and pay tax under
regular scheme for other place of business.

02. Composition levy u/s 10(2A):-
Calculation of tax in C.F.Y. u/s 10(2A):-

Q.5: Bansal and Chandiok started a partnership firm of Chartered Accountants in Jaipur (Rajasthan) on
1st April in the current financial year. The firm specializes in providing audit services to banks in
Rajasthan. It provided the following details of its turnover:
Quarter Amount in (`)
Apr-Jun 10 Lakh
Jul-Sep 20 Lakh

It crossed the threshold limit of ` 20 lakh on 1st August. Bansal and Chandiok wishes to opt to pay tax at
concessional rate under section 10(2A). Examine whether the firm is eligible for this scheme in the current
financial year? If yes, then determine the tax payable by it in quarters (i) Apr-Jun & (ii) Jul-Sep? [Study
Mat]
Answer: Legal Provision:-
Ü As per sections 10(1) & 10(2) of CGST Act, 2017, the composition scheme is available for goods & restaurant
service. Further, marginal services upto specified limit can be provided along with the supply of goods or
restaurant service.
Ü Section 10(2A) provides an option to a registered person, who is not eligible to pay tax under sections (1) and
10(2), of paying tax @ 6% (CGST-3% and SGST/UTGST-3%) provided his aggregate turnover in the
preceding financial year is upto `50 lakh. Said person can pay tax @ 6% of the turnover in State up to an
aggregate turnover of `50 lakh in curent financial year, subject to specified conditions.
Discussion & Conclusion:-

Ü In given case, since Bansal and Chandiok is supplying services other than restaurant services, it is not eligible to
pay tax under section 10(1) & 10(2).
Ü Bansal and Chandiok has started the supply of services in the current financial year. Therefore, its aggregate

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