GST Registration in Composition scheme

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A restaurant owner registered under the GST composition scheme is also earning commercial rent income. The query is whether they can continue with the composition scheme, as commercial rent typically falls under the regular GST scheme. It's clarified that restaurant service providers are not eligible for the 10% or Rs. 5 lakh service relaxation under the composition scheme. However, they might be able to opt for the composition scheme under section 10(2A) if the combined annual turnover for both restaurant business and rent income is below Rs. 50 lakhs, paying a composition fee of 6%.

DIVYESH JAIN

DIVYESH JAIN (Querist)

24 March 2023 Dear Sir,

One of my client is running a restaurant and is registered in Composition scheme in GST.

But now he is also earning commercial rent income amounting to Rs. 6 lacs and on rent income gst rate is 18% which comes under Regular scheme of registration.

My query is that in which scheme he needs to continue his business since rent on commercial property does not come under composition scheme.

Please help me in this matter.

Regards,
Divyesh Jain

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 March 2023 He should change it to regular scheme, as composition scheme will not be eligible for him.

DIVYESH JAIN

DIVYESH JAIN (Querist)

24 March 2023 I want to know what is the rule in such a situation. As rent income is only Rs. 6 lacs. He may take less rent if there is any way to continue in Composition scheme.

He is not yet registered in GST. Will have to take it.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)

24 March 2023 The relevant rule is contained in section 10 and accordingly he will not be eligible for composition as he is a restaurant service owner who is covered under entry (b) of paragraph 6 of Schedule II. The relaxation of provision of services upto 10% of turnover or Rs 5 lacs whichever is higher is not available to him being a restaurant service provider.
If he is unregistered he has to get registered under regular scheme. Alternatively he may opt for composition scheme under section 10(2A) subject to max turnover of Rs 50 lacs and payment of composition fee at 6%

DIVYESH JAIN

DIVYESH JAIN (Querist)

25 March 2023 Dear Abhishekji,

Thanks for your detailed reply, but can he opt for Composition scheme if his Turnover is below Rs. 50 lacs for both services combined i.e Restaurant business and Commercial Rent income.

Say Restaurant business he earns - Rs. 35 lacs p.a turnover
Commercial Rent Received - Rs. 4 lacs p.a

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)

29 March 2023 aggregate turnover includes both goods and services so according to me if turnover is within 50 lacs he can opt for composition scheme as there is similar restriction prescribed in section 10(2A)

DIVYESH JAIN

DIVYESH JAIN (Querist)

29 March 2023 Ok, Thanks a lot for sharing your valuable information.

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