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Rule 5 of the CGST Rules, 2017

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GST›CGST Rules, 2017›Chapter II, Composition Levy

At a glance

Entitlement and conditions

Rule 5(1)(a)–(b)The person must be neither casual nor non-resident. For the rule 3(1) option, appointed-day stock must exclude inter-State purchases, imports and receipts from an out-of-State branch, agent or principal.
Rule 5(1)(c)–(e)Stock purchased from an unregistered supplier requires payment under section 9(4). The person must pay tax on inward supplies under section 9(3) or (4) and must not have manufactured notified excluded goods during the preceding financial year.
Rule 5(2)A fresh intimation is not required every year. Continuation remains subject to the Act and rules.

Bars, duties and time limits

Rule 5(1)(f)–(g)Bills of supply must carry “composition taxable person, not eligible to collect tax on supplies” at the top. Every notice or signboard placed prominently at the principal and additional places of business must carry “composition taxable person”.

Procedure, powers and definitions

Rule 5(1)(g)The law does not settle what makes a display location prominent at a business premise.

A person choosing composition must satisfy the eligibility, stock and display conditions in rule 5. The rule excludes casual and non-resident taxable persons and connects inward supplies with the reverse-charge provisions of section 9. Composition can continue without a fresh annual intimation, but only while the person complies with the Act and the rules.^[1]

Quick facts

Rule 5, CGST Rules, 2017

Conditions and restrictions for composition levy

Provision
Act	Central Goods and Services Tax Rules, 2017
Chapter	II, Composition Levy
Rule title	Conditions and restrictions for composition levy
Related provisions
Other rules	Rule 3
Sections	Section 9 of the CGST Act, 2017, Section 10 of the CGST Act, 2017
Structure 5(1)(a)Casual and non-resident exclusions 5(1)(b)Appointed-day stock restrictions 5(1)(c)Unregistered-supplier stock tax 5(1)(d)Inward reverse-charge payment 5(1)(e)Preceding-year notified manufacturing exclusion 5(1)(f)Bill-of-supply declaration 5(1)(g)Business-place notices and signboards 5(2)Continuation without annual fresh intimation
Source
Law text	CBIC tax information portal, served on 17 September 2026^[1]

Text

The text below is the rule as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.^[1] The Rules as published in the Gazette of India is the legal source.

Rule 5, verbatim (show)

Rule 5. Conditions and restrictions for composition levy. -

(1) The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely: -

(a) he is neither a casual taxable person nor a non-resident taxable person;

(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3;

(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9;

(d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;

(e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding financial year;

(f) he shall mention the words "composition taxable person, not eligible to collect tax on supplies" at the top of the bill of supply issued by him; and (g) he shall mention the words "composition taxable person" on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

(2) The registered person paying tax under section 10 may not file a fresh intimation every year and he may continue to pay tax under the said section subject to the provisions of the Act and these rules.

Questions to answer on the file

Questions a reviewer answers from the engagement file, grouped by the part of the rule they come from. They describe what the rule asks; they do not decide it.

Casual and non-resident exclusions 5(1)(a)

Questions to answer on the file2 questions

Is the person a casual taxable person?
Is the registered person a non-resident taxable person?

Ticks stay in this browser only.

Appointed-day stock restrictions 5(1)(b)

Questions to answer on the file6 questions

Was the composition intimation filed under 3(1)?
Was any appointed-day stock purchased in inter-State trade or commerce?
Was any such stock imported from outside India?
Was any such stock received from the person’s branch outside the State?
Was any such stock received from the person’s agent outside the State?
Was any such stock received from the person’s principal outside the State?

Ticks stay in this browser only.

Unregistered-supplier stock tax 5(1)(c)

Questions to answer on the file3 questions

Was the stock purchased from an unregistered supplier?
What tax is legally payable under 9(4) for that stock purchase?
What9(4)tax was paid on that purchase?

Ticks stay in this browser only.

Inward reverse-charge payment 5(1)(d)

Questions to answer on the file2 questions

What9(3)or9(4)tax is payable on the inward goods/services supply?
What tax has been paid on that inward liability?

Ticks stay in this browser only.

Preceding-year notified manufacturing exclusion 5(1)(e)

Questions to answer on the file2 questions

Did the person manufacture goods covered by a10(2)(e)notification during the preceding financial year?
Is the applicable notified-goods list established for that preceding-year assessment?

Ticks stay in this browser only.

Bill-of-supply declaration 5(1)(f)

Questions to answer on the file2 questions

Does the bill carry the exact composition-taxable-person declaration?
Is that declaration at the top of the bill?

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Business-place notices and signboards 5(1)(g)

Questions to answer on the file4 questions

Does every notice or signboard display the words composition taxable person?
Are the notices or signboards displayed at a prominent place?
Does the checked population include the principal place of business?
Does it include every additional place of business?

Ticks stay in this browser only.

Continuation without annual fresh intimation 5(2)

Questions to answer on the file2 questions

Is this registered person actually paying tax under Section 10 for the place?
Does the auditor establish continuing eligibility under the applicable Act and Rules?

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Provisions connected to Rule 5
Provision	Connection	Words that tie them
Section 10 of the CGST Act, 2017	this provision requires Section 10 of the CGST Act, 2017	5(1) "option to pay tax under section 10"; 5(1)(e) "clause (e) of sub-section (2) of section 10"
Section 9 of the CGST Act, 2017	this provision requires Section 9 of the CGST Act, 2017	5(1)(c) "sub-section (4) of section 9"; 5(1)(d) "sub-section (3) or sub-section (4) of section 9"
Rule 3	this provision requires Rule 3	5(1)(b) "sub-rule (1) of rule 3"

Circulars and notifications

Circulars and notifications in the CBIC repository that cite this rule, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.

Notifications (1)

Number	Date	Subject
Notification No. 71/2019-Central Tax	13 December 2019	Seeks to give effect to the provisions of rule 46 of the CGST Rules, 2017. made under this rule

Unsettled questions

The words of Rule 5 do not answer this question. Where one decides a matter on the file, the answer depends on the position taken on it.

What makes a physical statutory display location prominent at the business premise?

See also

Section 10 of the CGST Act, 2017: composition levy
Section 9 of the CGST Act, 2017: levy and collection
Rule 3 of the CGST Rules, 2017: intimation for composition levy

References

Central Board of Indirect Taxes and Customs. "Rule 5. Conditions and restrictions for composition levy". Central Goods and Services Tax Rules, 2017, CBIC tax information portal. Retrieved 17 September 2026.

External links

CGST Rules, 2017, Rule 5 on the CBIC tax information portal