Important Keyword: Notification No. 50/2020 – Central Tax, CGST Seventh Amendment Rules, Composition Scheme GST 2020, Rule 7 CGST amendment, Section 10 CGST Act, Composition tax rate India, GST for small businesses, Composition levy changes 2020, Finodha GST Return Filing, GST registration for SMEs, Section 10(2A) composition scheme.
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[F. No. CBEC-20/06/09/2019-GST]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
New Delhi, the 24th June, 2020
Notification No. 50/2020 – Central Tax: Seeks to make seventh amendment (2020) to CGST Rules.
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
G.S.R (E). - In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:-
1. (a) These rules may be called the Central Goods and Services Tax (Seventh Amendment) Rules, 2020.
(b) They shall come into force with effect from the 01st day of April, 2020.
2. In the Central Goods and Services Tax Rules, 2017, in rule 7, for the Table, the following Table shall be substituted, namely:-
Table
| Sl. No. | Section under which composition levy is opted | Category of registered persons | Rate of tax |
| (1) | (1A) | (2) | (3) |
| 1. | Sub-sections (1) and (2) of section 10 | Manufacturers, other than manufacturers of such goods as may be notified by the Government | half per cent. of the turnover in the State or Union territory |
| 2. | Sub-sections (1) and (2) of section 10 | Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II | two and a half per cent. of the turnover in the State or Union territory |
| 3. | Sub-sections (1) and (2) of section 10 | Any other supplier eligible for composition levy under sub-sections (1) and (2) of section 10 | half per cent. of the turnover of taxable supplies of goods and services in the State or Union territory |
| 4. | Sub-section (2A) of section 10 | 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 | three per cent. of the turnover of taxable supplies of goods and services in the State or Union territory.’’. |
(Pramod Kumar)
Director,
Government of India
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 3/2017-Central Tax, dated the 19th June, 2017, published vide number G.S.R. 610(E), dated the 19th June, 2017 and last amended vide notification No. 48/2020 - Central Tax, dated the 19th June, 2020 published vide number G.S.R. 394 (E), dated the 19th June, 2020.
📚 Frequently Asked Questions (FAQs): Notification No. 50/2020 – Central Tax
Q1: What is Notification No. 50/2020 – Central Tax about?
Answer:
It introduces the Seventh Amendment to the CGST Rules, 2017, primarily updating Rule 7 — which prescribes composition levy tax rates under Section 10 of the CGST Act.
The amendment replaces the earlier rate table, introducing a new composition scheme rate for those opting under Section 10(2A).
Q2: What is the composition scheme under GST?
Answer:
The Composition Scheme allows small taxpayers to pay tax at a fixed, lower rate of turnover and file quarterly returns, reducing compliance burdens.
It’s designed for businesses with annual turnover up to ₹1.5 crore (₹75 lakh in some states).
📘 To register for composition, use Finodha GST Registration.
Q3: What is the significance of Section 10(2A) in this amendment?
Answer:
Section 10(2A) (introduced via Finance (No. 2) Act, 2019) allows service providers and mixed suppliers (goods + services) to avail composition benefits.
Under this rule, such taxpayers can pay 3% CGST + 3% SGST, totaling 6%.
📘 Small service providers can easily opt in via Finodha GST Compliance Services.
Q4: When does this amendment come into effect?
Answer:
The revised rules are effective from 1st April 2020, applicable retrospectively from the start of the financial year 2020–21.
Q5: What prompted this change?
Answer:
To simplify tax rates, harmonize the composition scheme for goods and services, and include small service providers who were earlier excluded under Section 10(1).
Q6: Which businesses are eligible for the composition scheme under this notification?
Answer:
Eligible businesses include:
Manufacturers (except for notified goods like tobacco, pan masala, etc.)
Traders and small retailers
Restaurants and food service providers
Service providers (under Section 10(2A)) with turnover up to ₹50 lakh
Q7: What are the key exclusions under the composition scheme?
Answer:
Taxpayers cannot opt for composition if they:
🚫 Supply non-taxable goods/services (like alcohol).
🚫 Make inter-state supplies.
🚫 Supply goods through e-commerce operators.
🚫 Manufacture notified goods (like ice cream, tobacco, or pan masala).
Q8: How is turnover calculated for composition taxpayers?
Answer:
Turnover includes aggregate value of taxable supplies made within a State/UT (excluding inward supplies and GST).
It does not include exempt or export supplies for rate calculation.
Q9: How does this benefit small businesses?
Answer:
✅ Reduces tax liability for small businesses.
✅ Simplifies return filing (quarterly).
✅ Exempts from maintaining detailed invoices.
✅ Encourages compliance among micro and small enterprises.
📘 Simplify your compliance — try Finodha GST Return Filing.
Q10: Are composition taxpayers eligible for Input Tax Credit (ITC)?
Answer:
No 🚫.
Composition taxpayers cannot claim ITC on inputs or input services under Section 10(4) of the CGST Act.
Q11: What are the compliance requirements for composition taxpayers?
Answer:
File CMP-08 quarterly (by 18th of next month).
File GSTR-4 annually (by 30th April following FY).
Issue a “Bill of Supply” instead of a tax invoice.
Mention “composition taxable person” on all documents.
Q12: What is the penalty for wrongly opting into the composition scheme?
Answer:
If a taxpayer incorrectly avails composition, tax is recovered under Section 10(5) along with interest and penalty under Section 73 or 74 of the CGST Act.
📘 Need expert help with eligibility? Get assistance via Finodha GST Experts.
Q13: Who issued and signed this notification?
Answer:
It was issued by the Ministry of Finance, Department of Revenue (CBIC) and signed by Shri Pramod Kumar, Director, Government of India, vide File No. CBEC-20/06/09/2019-GST.
🏁 Conclusion
Notification No. 50/2020 – Central Tax simplifies and expands the composition levy for small taxpayers by revising Rule 7 of the CGST Rules.
It enables small businesses and eligible service providers to comply easily with GST at lower tax rates and reduced paperwork.
Download PDF: Notification No. 50/2020 – Central Tax
More Information: https://taxinformation.cbic.gov.in/
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