Earlier, composition scheme was applicable only to the supplier of goods. However, in 32nd GST council meeting, it was announced that this scheme will be applicable for service providers also. The scheme for service providers is available from 1 April 2019 .
Following persons can opt for composition scheme available to Service Providers
- Supplier of Services
- Supplier of Goods and Services
It is important to note that restaurant service providers were earlier eligible under the composition scheme.
Eligible service providers having annual turnover upto Rs.50 lakh can opt for this scheme.
The due date to opt into the composition scheme for FY 19-20 for eligible service providers is extended to 30th September 2019.
The different conditions that are to be fulfilled are
- Supplier’s service turn over must be less than Rs. 50 Lakh.
- Non-taxable goods must not be supplied by the supplier.
- E-Commerce operator must not be used.
- Inter-state supplies engagement must not be used.
- Casual taxable or non-taxable income must not be used.
- Bill for Tax invoice shouldn’t be issued
- No liability can be charged and collect tax from their customer.
- Input tax credit can not be claimed for.
- need to pay regular tax for the reverse charge supplies.
- Cocoa, pan masala and tobacco and manufactured tobacco substitutes cannot be supplied.
Positives of scheme:
- The compliances are few
- The tax liability is decreased
- The accounts book holds less details
- There will be no income credits.
- The liability is borne by the taxpayer on his own.
- The Export is not allowed.
The rate of composition for service providers is 6% GST rate wherein 3% is for CGST and 3% is for SGST. The tax liable circle are to file yearly or Annual return with Quarterly payment of tax. For Example, a purchases, sales value total purchase value are all the same for a normal 18% taxpayer and 6% composition taxpayer. few divisions have increased tax comparing to normal taxpayer such as Gross Profit, sales value exclusive of taxes.