CGST Rule 5: Conditions and Restrictions for Composition Levy

Provisions under Rule 5 of the CGST Rules, 2017 relating to “Conditions and Restrictions for Composition Levy”:

CGST Rule 5: Conditions and Restrictions for Composition Levy (Chapter II: Composition Levy Rules) [*1]

(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.

Notes (History of Amendments in Bare Text):

1. CGST Rule 5 introduced vide Notification 3/2017, effective 22/06/2017.