# Composition Scheme: End-to-End Comprehensive Application
This lesson integrates aggregate turnover computation, eligibility check, continuation check, tax calculation (including RCM) and the fly-ash brick disqualification.
## Key Reminders
- Aggregate Turnover excludes GST charged but includes excise/cess collected (since pre-GST levies that exist for some goods are part of turnover).
- Interest on FD is exempt supply but is included in aggregate turnover for the threshold check (the carve-out only applies to the 10%/₹5 lakh marginal-service limit).
- However for the marginal services 10% formula, interest is excluded.
- Notified products such as ice cream, pan masala, tobacco, aerated water, fly ash bricks, bricks of fossil meals, building bricks, earthen/roofing tiles make a person ineligible for composition.
- Composition rate for manufacturer = 1% (½% CGST + ½% SGST) on turnover in State.
- Restaurant services attract 5% composition rate.
- Inward RCM supplies → tax at normal rates, NOT composition rate.
### Example 1
Example – RSA Firm (Garment Manufacturer, Jammu)
Facts: Preceding FY → Garments ₹1.2 cr; Tobacco ₹30 lakhs (incl. ₹10 lakh excise & ₹5 lakh GST); FD Interest ₹20 lakhs.
Current FY (Q1): Garments ₹50 lakhs; FD Interest ₹10 lakhs; Restaurant services to employees ₹20 lakhs; Other exempt services ₹5 lakhs; Legal services received inter-state under RCM ₹10 lakhs. Tax rate 18%.
Solution:
(1) Aggregate Turnover (Preceding FY)
= ₹1.2 cr + (₹30 lakhs − ₹5 lakhs GST) + ₹20 lakhs interest
= ₹1.45 crores (excise included; GST excluded; interest included for AT)
(2) Can opt this year?
Yes. AT (₹1.45 cr) ≤ ₹1.5 cr threshold for Jammu & Kashmir.
(3) Can it continue this FY?
Yes, because:
- AT in current year does not cross ₹1.5 cr, AND
- Marginal service limit not breached:
- Higher of 10% × ₹1.45 cr (= ₹14.5 lakhs) or ₹5 lakhs → ₹14.5 lakhs cap on non-restaurant services
- Restaurant services are unlimited (subject to ₹1.5 cr aggregate cap).
(4) Tax for quarter ended June
- On outward supplies @ 1% on (₹50 + ₹20 + ₹5) lakhs = 1% × ₹75 lakhs = ₹75,000 (CGST ₹37,500 + SGST ₹37,500). Interest on FD is exempt — not added.
- On inward RCM (legal services) @ 18% × ₹10 lakhs = ₹1,80,000 (IGST as inter-state).
- Total = ₹2,55,000
(5) If RSA started manufacturing fly-ash bricks
No. Fly-ash bricks is a notified product → composition supplier becomes ineligible and must exit the scheme.