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Can service providers opt for composition scheme

05 July 2021

can service providers like electricity bill collector agent and other contractor opt for composition scheme.
and which scheme will be better for them.

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12 Replies

CA Altamush Zafar (GST Consultant) (15986 Points)
Replied 06 July 2021

Service providers have a different composition scheme from goods supplier.
These schemes are only beneficial if your business is totally b2c model.

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sabyasachi mukherjee (27746 Points)
Replied 06 July 2021

Service providers like electricity bill and collector agent and other contractor must opt for a regular scheme.

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 06 July 2021

Yes you can Opt for Alternative Composition Scheme .

In regard sub-section (2A) of Section 10 provide an alternative Composition scheme .
Eligibility for the Scheme :
1. whose aggregate turnover in the preceding FY did not exceed 50 lac
2. Cannot Supply Interstate
3 Cannot supply goods or services which are not leviable to tax
4. Cannot supply through E-commerce who required to collect TCS .

Note : Rate of Tax on turnover is 6%(3% CGST + 3% SGST)

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sabyasachi mukherjee (27746 Points)
Replied 06 July 2021

TThe querist have not mentioned the nature of service provider. Rs. 50 lacs does not arise in this case.

SEC 10 IS KNOWN .

CMA Poornima Madhava (CMA) (13112 Points)
Replied 06 July 2021

If you have B2B transactions, better to opt for regular scheme so that the ITC is not restricted. If all (or most) of the transactions are B2C, then composition scheme can be considered.

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Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 06 July 2021

The Querist have specifically mentioned the nature of Services " electricity bill collector agent & other contractor" & this supplies are cover under supply of services.
Where as the composition dealer who has opted the Scheme under section 10(1) cannot supply services But u/s 10(2a) the composition dealer can supply services. Hence the reply was given accordingly. Moreover let the Querist decide what is beneficial for him.

Only Fun Time (22 Points)
Replied 06 July 2021

Commission agents like CSP agents who work on behalf of banks.they provide facilities like deposit withdrawl and get commission in return.Now if they give tax on the commission earned in GST.then they will show only commission earned as total turnover in INCOME TAX.
since lakhs of money they have taken and transfered via their bank account will INCOME TAX DEPARTMENT ask them anything regarding this,will they treat all the deposited money in their account as their income.
please clearfy this to me

sabyasachi mukherjee (27746 Points)
Replied 07 July 2021

Conditions of composition scheme:
1. composition scheme is available to those whose aggregate turnover of supply of goods in a financial year did not exceed Rs.100 lacs. This limit is increased to 1.5 crores from 1.4.2019
Different states hv different limits.
This limit can be extended to 1.5 crores by issuing notification.
Different states hv different threshold limits.
So a service provider can opt for both .
But since the figures are not stated here, a more reciprocal and responsive discussion can be made.

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 07 July 2021

The Querist has specifically mentioned that "Can Service Provider opt for the Composition Scheme"
So the composition scheme u/s 10(1) cannot opt for the same , as there is limitations of supply services upto 10 of turnover or 5 lac whichever is higher.
So the reply was accordingly given that alternative Composition scheme prescribed in sub section (2a) of Section 10 can be opted & eligibility & limitations to opt scheme is also mentioned in the reply.
So in this case reply precisely given accordingly. Moreover there is no further query being raised by Querist.