no composition scheme for service

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percy (Querist)
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07 November 2017 why can't there be composition scheme for services....like small traders. manufacturers.. restaurants....r there not any small service providers... why can't there be a composition scheme for any person with limited preset turnover .. what hv small service sector done wrong also they r not included...

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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09 November 2017 Composition scheme available for restaurant service providers

percy

percy (Querist)
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09 November 2017 thanks sir..what I was trying to say was why can t

percy

percy (Querist)
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09 November 2017 thanks sir...I was trying to tell that why can't small service providers of supply be included in composition ...Eg..photo coping shop is 18 %.. though some we use our own paper n material...do u have any idea about gst fr photocopy shop

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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04 August 2024 The idea of a composition scheme in GST for small service providers is a common query, and your point is valid—small businesses, including service providers, often face challenges with compliance and tax burden.

### Current Composition Scheme under GST

As of the current GST framework, the Composition Scheme is primarily available for:

1. **Goods Suppliers:** Small traders and manufacturers can opt for the composition scheme if their turnover is below ₹1.5 crore (or ₹75 lakhs in some states). They pay a lower, fixed percentage of their turnover as tax and have simplified compliance requirements.

2. **Restaurants:** The scheme also applies to restaurants, which can benefit from reduced tax rates under this scheme.

### Why No Composition Scheme for Services?

1. **Complexity of Services:** Services are often more complex to define and tax than goods. They can vary widely in nature, and their value is not always directly related to the cost of inputs. This complexity makes it harder to design a one-size-fits-all composition scheme.

2. **Revenue Impact:** The government may also be concerned about the potential revenue loss from allowing a composition scheme for services, given that the tax rates on services are often higher compared to goods.

3. **Input Tax Credit (ITC):** Services generally have a higher proportion of input tax credit claims compared to goods. Allowing a composition scheme could complicate the mechanism of ITC and result in a potential loss of tax revenue.

### Specific Case: Photocopying Shops

For businesses like photocopying shops, which provide a service but also use their own materials, the applicable GST rate is indeed 18% under the category of "Printing and Reproduction of Recorded Media" (HSN Code 9983). These businesses must:

- **Collect and Pay GST:** Charge 18% GST on their services.
- **File Returns:** Regularly file GST returns and comply with GST regulations.
- **Claim Input Tax Credit (ITC):** They can claim ITC on inputs and input services used in providing their services.

### Future Developments

It's always possible that the GST regime may evolve. The idea of introducing a composition scheme for services might be revisited in the future based on industry feedback and economic conditions.

For now, if you're a small service provider struggling with GST compliance, consider:

- **Consulting a GST Professional:** To navigate the complexities and optimize compliance.
- **Monitoring Updates:** Keep an eye on announcements from the GST Council for any changes or new schemes that might be introduced.

If you have more specific questions about GST for your business, or need further assistance, feel free to ask!

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