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Composition Scheme for Service Providers Under GST



New Composition Scheme for Service Providers under GST 


(Updated on 27.11.2019)

The Government introduced the composition scheme to assist small taxpayers and reduce the compliance burden.  A dealer under composition scheme is required to maintain fewer records/books of accounts and not required to file monthly returns.
Earlier, the scheme was available only to the suppliers of goods. However, in the 32nd GST Council Meeting, it has been announced that the scheme will now be available to service providers too. The scheme for service providers is available from 1 April 2019.

Rate for composition service providers:

1.     For composition service providers, the applicable GST rate is 6% (being 3% CGST + 3% SGST).
2.     For calculation of the aggregate annual turnover, the value of supply of exempt services byway of extending deposits, loans or advances where the income is represented by way of interest or discount, shall not be taken into account.

Compliance by service providers under the composition scheme:

The taxpayers would be required to file only one Annual return with quarterly payment of taxes (along with a simple declaration).

Conditions to be fulfilled to be eligible under the scheme:

1.     The supplier of service must have a turnover of less than Rs.50 lakhs in the previous financial year.
2.     The supplier should not be supplying non-taxable goods.
3.     The supplier should not be engaged in making inter-state supplies.
4.     The supplier should not supply through an e-commerce operator.
5.     The supplier should not be a casual taxable person or non-resident taxable person.
6.     The supplier must issue a bill of supply instead of a tax invoice. The supplier must mention the words ‘composition taxable person’ on the bill of supply.
7.     The supplier cannot charge and collect tax from the customer.
8.     The supplier cannot claim the input tax credit.
9.     The supplier must pay normal tax for reverse charge supplies.
10.  The supplier cannot be supplying ice cream and other edible ice, whether or not containing cocoa, pan masala and tobacco and manufactured tobacco substitute.

   CA MOHAMED ASHARAF, FCA, DISA (ICA)
   +919447746535
   www.numerzone.com

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