Composition Scheme – Prescribing Aggregate Turnover Limit

What does this Notification say?

Notification No. 7/2017 was issued under Section 10 of the CGST Act, 2017 to prescribe the aggregate turnover limit for taxpayers who wished to opt for the Composition Scheme. The Composition Scheme was introduced to reduce the compliance burden on small businesses by allowing them to pay GST at a fixed percentage of their turnover instead of following the normal GST provisions.

Initially, this notification prescribed that registered persons having an aggregate turnover up to ₹75 lakh in the preceding financial year could opt for the Composition Scheme. For certain Special Category States, the turnover limit was fixed at ₹50 lakh. (The turnover limit has been revised subsequently through later notifications.)

Under the Composition Scheme, taxpayers are required to pay GST at prescribed rates on their turnover, file fewer returns, maintain simplified records, and comply with fewer procedural requirements. However, they cannot collect GST separately from customers or claim Input Tax Credit (ITC). They are also not permitted to make inter-State outward taxable supplies or supply goods through e-commerce operators required to collect TCS, subject to the law applicable at the relevant time.

This notification mainly benefited small traders, manufacturers, and eligible restaurants by simplifying GST compliance and reducing administrative costs.

Example

A grocery shop with an annual turnover of ₹60 lakh opted for the Composition Scheme under Notification No. 7/2017 and paid GST at the prescribed composition rate instead of following the normal GST procedure.

Key Points

• Prescribes eligibility turnover limit for Composition Scheme.
• Initially fixed at ₹75 lakh (₹50 lakh for specified States).
• Simplifies GST compliance for small taxpayers.
• Reduces return filing requirements.
• ITC cannot be claimed under the scheme.

One-Line Summary

Notification No. 7/2017 prescribed the turnover limit for taxpayers opting for the GST Composition Scheme.