Composition scheme in GST

This query is : Resolved

Shraddha Kirve (Querist)
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20 January 2021 Hi, My client is providing business consulting service as well as renting of immovable property services.
Can my client go for composition scheme under GST ? Can anybody please help me in this.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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06 July 2024 No, your client cannot opt for the composition scheme under GST if they are providing both business consulting services and renting of immovable property services. Let me explain why:

1. **Composition Scheme Eligibility:**
- The composition scheme is available to specific categories of taxpayers, primarily those with a turnover threshold up to Rs. 1.5 crore (Rs. 75 lakh for special category states) who are engaged in the supply of goods.
- It is also available to restaurants (not serving alcohol) and specific service providers.

2. **Activities Covered:**
- The composition scheme is generally not available for service providers except for specific services like restaurant services (without alcohol) and certain notified services.

3. **Activities Excluded:**
- Business consulting services fall under the category of professional services, which are not eligible for the composition scheme.
- Renting of immovable property is also specifically excluded from the composition scheme.

4. **Ineligibility for Mixed Activities:**
- Since your client is engaged in both consulting services (a professional service) and renting of immovable property (a service explicitly excluded from composition), they cannot opt for the composition scheme.

5. **Compliance and Penalty Risk:**
- Opting for the composition scheme when not eligible can lead to penalties and interest liabilities under GST law.
- It's crucial to correctly assess eligibility before opting for the composition scheme to avoid these penalties.

Therefore, based on the nature of services provided by your client (business consulting and renting of immovable property), they are not eligible to opt for the composition scheme under GST. They would need to comply with regular GST provisions, including filing detailed returns and payment of tax on their services as per standard rates applicable.

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