Skip to content
GST Law Hub
CGST Rule 7: Rate of tax of the composition levy | Finin2min

Rule 7 - Rate of tax of the composition levy

CGST Rules, 2017
ACTIVEDIRECT_OFFICIAL_RULE_PAGEindex,follow
Source control: The text/status on this page is tied to the official source gateway and the Phase 1 legal-review register. Open official source.

Finin2min Summary - Rule in 2 Minutes

Paragraph / test Plain-language meaning Manufacturer CGST component is 0.5%; the corresponding SGST/UTGST component must be checked separately. Restaurant/catering supplier CGST component is 2.5%; the corresponding State/UT component normally creates a combined 5% intra-State composition rate. Other goods-scheme supplier CGST component is 0.5% on turnover of taxable supplies of goods and services, read with section 10 and the corresponding State/UT rate. Section 10(2A) supplier CGST component is 3%; with the corresponding State/UT component the combined intra-State rate is ordinarily 6%.

Exact operative text

The category of registered persons, eligible for composition levy under section 10 and the provisions of this Chapter, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table: TABLE 1. Section: sub-sections (1) and (2) of section 10. Category: manufacturers, other than manufacturers of such goods as may be notified by the Government. Rate: half per cent. of the turnover in the State or Union territory. 2. Section: sub-sections (1) and (2) of section 10. Category: suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II. Rate: two and a half per cent. of the turnover in the State or Union territory. 3. Section: sub-sections (1) and (2) of section 10. Category: any other supplier eligible for composition levy under sub- sections (1) and (2) of section 10. Rate: half per cent. of the turnover of taxable supplies of goods and services in the State or Union territory. 4. Section: sub-section (2A) of section 10. Category: registered persons not eligible under the composition levy under sub- sections (1) and (2), but eligible to opt to pay tax under sub-section (2A), of section 10. Rate: three per cent. of the turnover of supplies of goods and services in the State or Union territory.

Paragraph-wise decode

Paragraph / test Plain-language meaning Manufacturer CGST component is 0.5%; the corresponding SGST/UTGST component must be checked separately. Restaurant/catering supplier CGST component is 2.5%; the corresponding State/UT component normally creates a combined 5% intra-State composition rate. Other goods-scheme supplier CGST component is 0.5% on turnover of taxable supplies of goods and services, read with section 10 and the corresponding State/UT rate. Section 10(2A) supplier CGST component is 3%; with the corresponding State/UT component the combined intra-State rate is ordinarily 6%.

Section-Rule-Form-Notification bridge

No direct Rule certified in Phase 1. Check notifications, circulars, forms and corresponding State law.

The mapping is a legal concordance, not a round-robin related-link list. It is limited to instruments certified in this phase.

Practical example

Rule 7 prescribes 2.5% CGST; the corresponding SGST/UTGST component must be added under the relevant State/UT rules, ordinarily producing a combined 5% rate.

Professional alert

• Rule 7 prescribes the Central tax component. Do not present it as the total tax without the corresponding SGST/UTGST layer. • Eligibility, turnover base and notified threshold must be tested before applying the rate. • A composition taxpayer cannot make a disqualifying inter-State outward supply and cannot collect tax separately.

Implementation checklist

  1. Fix the transaction, taxable period and jurisdiction.
  2. Read every subsection, proviso, explanation and omission marker.
  3. Open the mapped Rule, form, notification and circular.
  4. Test State/UT variation and portal version.
  5. Preserve evidence, approvals, working papers and acknowledgements.
  6. Record the conclusion, assumptions, source date and reviewer.

Evidence and retention checklist

Practical Q&A

What does rule 7 regulate?
It regulates rate of tax of the composition levy. Read the exact text, conditions, exceptions and transaction date together.
Which subordinate law should be checked?
No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.
What evidence should be retained?
Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.
Can portal behaviour override the statute?
No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.
← PreviousNext →