Under the composition levy scheme, a registered taxable person is qualified to pay, in lieu of tax payable by him, an amount calculated at such rate as may be prescribed by the proper officer of the Central or a State Government, but not less than 2.5% in case of a manufacturer and 1% in any other case of the turnover in a state during the year which means the minimum rate of tax payable by a manufacturer is 2.5% and 1% in any other case under composition levy.
Who are disqualified for Composition Levy:
• A tax payer engaged in the supply of services
• Who makes any supply of goods which are not leviable to tax under this Act i.e. supplier of exempted goods.
• Who makes inter-state outward supply of goods i.e. the benefit of Composition Levy is available only for Intra-state suppliers.
• Who makes any supply of goods through an E-commerce operator who is required to collect tax at source u/s 56.
• Who is manufacturer of such goods as may be notified on the recommendation of the council.