Service business by composition dealer

This query is : Resolved

sunil (Querist)
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05 November 2017 Dear experts,
I have optioned for composition dealer doing business of home appliance (electronics),now i became dealer of DTh service ,now it is difficult for accounting how to pass entry of DTh recharge amount received ,for that i cannot issue invoice, but depositing amount in bank .composition dealer can only issue bill of supply .can i issue bill of supply for amount received for DTH Recharge

sunil

sunil (Querist)
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06 November 2017 for the same I take another gst no for service businesses is it right step

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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23 July 2025 Yes, your approach needs some clarification and guidance, as a **composition dealer under GST** is **not allowed to supply services**, except in a **very limited manner**. Let’s break it down:

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### 🔹 Facts of Your Case:

* You have opted for **composition scheme** under GST.
* You deal in **home appliances (electronics)** — which qualifies for composition.
* You’ve now become a **DTH service dealer** — and you're receiving **recharge amounts** from customers.

---

### 🔸 Problem:

Under the **GST Composition Scheme**:

* **Service supply** is **generally not permitted**, except:

* Services up to **₹5 lakh or 10%** of total turnover (whichever is higher) \[Notification 14/2019-Central Tax].
* You **cannot issue a GST invoice**, only a **Bill of Supply**.
* You **cannot collect GST** from the customer.

---

### ✅ Solutions:

#### **Option 1: Continue as Composition Dealer with Limits**

* If **DTH commission or service value** is small and within the 10%/₹5 lakh limit:

* You **can continue under composition**.
* Issue a **Bill of Supply** for the **commission income only**, **not for recharge value**.
* Record recharge receipts as **pass-through or reimbursement** amounts — not as your revenue.

**Accounting Entry:**

```plaintext
Bank A/c Dr. ₹500 (full amount received from customer)
To Recharge Payable/DTH Co. A/c ₹450 (amount paid to DTH company)
To Commission Income A/c ₹50 (your margin/commission)
```

#### **Option 2: Register a Separate GST Number for Services**

* If service turnover is or will exceed the permissible limit:

* Yes, taking **a separate GST registration for service business** is a **correct and advisable step**.
* The **new registration** will be a **regular scheme**, not composition.
* You can:

* Issue **GST invoices**
* **Claim ITC**
* Properly account for DTH services

---

### ⚠️ Important Notes:

* You **cannot issue a Bill of Supply for recharge value**, as it’s not your supply — you're an agent.
* Only issue **Bill of Supply for your commission**, if under composition.
* If you continue both businesses under one GSTIN, and total **services exceed allowed limits**, you **violate composition scheme** and may face penalties.

---

### ✅ Recommendation:

* **Option 2 is the correct approach** if you expect to scale or grow DTH services.
* Maintain **separate books of account** for both registrations.

---

Let me know if you'd like help drafting:

* **Accounting formats**
* **Sample journal entries**
* **How to segregate revenue under two GSTINs**

Happy to assist.

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