Rule 5 of CGST Rules 2017: Conditions and Restrictions for Composition Levy

Provisions under Rule 5 of the Central Goods and Services Tax (CGST) Rules, 2017 relating to “Conditions and Restrictions for Composition Levy”, are as under:

CGST Rule 5: Conditions and Restrictions for Composition Levy (Chapter-II: Composition Levy Rules) 

(1) The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-

(a) he is neither a casual taxable person nor a non-resident taxable person;

(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3;

(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9;

(d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;

(e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding financial year;

(f) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and

(g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

(2) The registered person paying tax under section 10 may not file a fresh intimation every year and he may continue to pay tax under the said section subject to the provisions of the Act and these rules.

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It may be noted that the above information is based on Updated CGST Rules 2017 (amended upto 5th May 2020), as compiled/ shared by CBIC (i.e. as notified/ amended upto 5th May 2020 by the CBIC). However, for detailed/ official information and/ or subsequent updates, please refer relevant Notifications. E&OE

Further, it may be noted that CGST Rules 1 to 26 (pertaining to Chapters on items, like 'Preliminary', 'Composition' and 'Registration') were initially notified by CBIC vide Notification No. 3/2017 Central Tax dt. 19 June 2017, applicable w.e.f. 22 June 2017 (or as may be specified in respective Rules).

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