why no service in composition....
This query is : Resolved
21 November 2017
why are small service providers not included in composition scheme..what is the logic....
22 November 2017
A taxpayer whose turnover is below Rs 1,5 crore* can opt in for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75* lakh.
The following people cannot opt for the scheme:
Supplier of services other than restaurant related services
Manufacturer of ice cream, pan masala, or tobacco
Casual taxable person or a non-resident taxable person
Businesses which supply goods through an e-commerce operator
w.e.f. from 23rd GST Meeting:
Taxpayers registered under the GST Composition Scheme can now supply services with a taxable value of upto Rs.5 lakhs per annum
Those supplying goods and services (services not exceeding Rs 5 lakhs in total) eligible for compositions scheme.
The following people cannot opt for the scheme:
Supplier of services other than restaurant related services
Manufacturer of ice cream, pan masala, or tobacco
Casual taxable person or a non-resident taxable person
Businesses which supply goods through an e-commerce operator
w.e.f. from 23rd GST Meeting:
Taxpayers registered under the GST Composition Scheme can now supply services with a taxable value of upto Rs.5 lakhs per annum
Those supplying goods and services (services not exceeding Rs 5 lakhs in total) eligible for compositions scheme.
Message likes :
1 times
22 November 2017
THANKS SIRJI..... That's great..but that's only allowed if u qualify for scheme due to trader.. manufacturer or restaurant.....
also any idea of notification 11/11/17 for printing n copying...Pl see last 2 point...can't interpret it ..very confusing....12 18 percet
22 November 2017
THANKS SIRJI..... That's great..but that's only allowed if u qualify for scheme due to trader.. manufacturer or restaurant.....
also any idea of notification 11/11/17 for printing n copying...Pl see last 2 point...can't interpret it ..very confusing....12 18 percent for photocopying as using my own ink n paper.... PLEEEEEESSSSSee CHJ N ASSSSSISSSTTTT re
03 August 2025
You're right — the initial GST Composition Scheme was designed for small traders, manufacturers, and restaurants, but not for service providers (except restaurants). Let's go over why that was the case, and then look at how it evolved — especially in light of Notification 11/2017 and later changes.
❓ Why were small service providers not originally included in the Composition Scheme?
✅ 1. Nature of Services vs. Goods
Services are often intangible, location-based, and value-driven, making it difficult to standardize a fixed tax rate like in trading/manufacturing.
Composition scheme relies on low compliance, easy tax calculation, which is harder for diverse services.
✅ 2. Risk of Revenue Leakage
Services tend to have high profit margins, so allowing a lower tax rate might result in revenue loss to the government.
✅ 3. Place of Supply Complexity
For services, determining Place of Supply (POS) is more complicated than goods.
The POS rule is critical to GST credit distribution between states — and composition taxpayers are not allowed to make inter-state supply.
🔄 Then what changed?
From 1st April 2019, government allowed service providers (and mixed suppliers of goods + services) to opt into a Composition-like scheme under Notification No. 2/2019 – Central Tax (Rate):
📌 Eligibility:
Aggregate turnover in the preceding FY up to ₹50 lakhs
Can pay tax at 6% (3% CGST + 3% SGST)
So this isn't exactly Composition Scheme under Section 10, but a special notification-based composition rate for services.
📑 About Notification 11/2017-Central Tax (Rate)
This notification defines GST rates for various services, including printing and photocopying. You mentioned confusion around printing & copying using your own ink and paper. Here's a simplified version:
🖨️ Printing/Photocopying GST Rates:
If you supply goods as principal (own paper + ink + content) → 12% or 18%, depending on job:
If it's primarily printing of content supplied by recipient, it's a service.
If you're printing your own material and selling it, it's goods.
Photocopying (using own machines, ink, and paper) → usually falls under SAC 998912 – Photocopying services, taxed at 18%.
❓ Why were small service providers not originally included in the Composition Scheme?
✅ 1. Nature of Services vs. Goods
Services are often intangible, location-based, and value-driven, making it difficult to standardize a fixed tax rate like in trading/manufacturing.
Composition scheme relies on low compliance, easy tax calculation, which is harder for diverse services.
✅ 2. Risk of Revenue Leakage
Services tend to have high profit margins, so allowing a lower tax rate might result in revenue loss to the government.
✅ 3. Place of Supply Complexity
For services, determining Place of Supply (POS) is more complicated than goods.
The POS rule is critical to GST credit distribution between states — and composition taxpayers are not allowed to make inter-state supply.
🔄 Then what changed?
From 1st April 2019, government allowed service providers (and mixed suppliers of goods + services) to opt into a Composition-like scheme under Notification No. 2/2019 – Central Tax (Rate):
📌 Eligibility:
Aggregate turnover in the preceding FY up to ₹50 lakhs
Can pay tax at 6% (3% CGST + 3% SGST)
So this isn't exactly Composition Scheme under Section 10, but a special notification-based composition rate for services.
📑 About Notification 11/2017-Central Tax (Rate)
This notification defines GST rates for various services, including printing and photocopying. You mentioned confusion around printing & copying using your own ink and paper. Here's a simplified version:
🖨️ Printing/Photocopying GST Rates:
If you supply goods as principal (own paper + ink + content) → 12% or 18%, depending on job:
If it's primarily printing of content supplied by recipient, it's a service.
If you're printing your own material and selling it, it's goods.
Photocopying (using own machines, ink, and paper) → usually falls under SAC 998912 – Photocopying services, taxed at 18%.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Medical reimbursement of hospitalization
- Accounting for non refundable grant received under National Livestock Mission Scheme.
- CAPITAL GAIN ITR
- Individual received money from father need to show in itr
- Cash deposit in individual account more than one crore in FY24-25
- ITR 2 - New regime - Interest on borrowed capital for let out property
- Excess tax paid against liability us140b and itr us 139(8a)
- STCG ITR filing for ETF SILVER
- List of valid legal heir certificate for wife of deceased person FY 2024-25
- Form 13 lower TDS deduction certificate u/s 197
- First proviso to Section 48 - Capital gain - NRI
- Brokerage ,STT and other charges_Capital gains
- Sale of Fixed Asset reporting in Fixed Asset Chart asper compnies Act
- Guidance Required on Returning Defective Equipment Purchased Without ITC Claim
- About foundation registration
- Income tax calculation-salary
- Deemed capital gain due to unutilized amount in CG account scheme
- Income Tax and FEMA Implications for Receiving Equity Stake in a UK Company as CTO
- Crumb Rubber
- HUF Gifts
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
