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Composition scheme for service

percy (B.Com) (370 Points)

02 July 2018

I m surprised WHY services is not included in composition scheme...
why can't it be added to it

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9 Replies

hemant mittal (56 Points)
Replied 02 July 2018

only restaurant service is eligible

1 Like

percy (B.Com) (370 Points)
Replied 02 July 2018

I know that...by why is govt no including small services in it

1 Like

HEMANTH RANKA (Tax & Financial Consultants) (360 Points)
Replied 02 July 2018

Because it will amount to revenue loss to the government. The option for composition to traders has been given only because when they buy goods from the wholeseller they pay tax which is not eligible for ITC. So it becomes the revenue of the government. But in case of service providers of them have very less inputs and input services and hence there will be loss to government if the service providers are allowed to composition scheme.

Take example of rent from commerical buildings- if the service provider is given composition scheme he will pay only 1% instead of 18%. And in the form of inputs he has nothing through which government can make good the revenue loss.

Take example of a traders- when he makes purchases from a wholeseller he pays tax which is non inputable and hence the revenue loss is set off in that manner.

1 Like

Vinod Babu (24191 Points)
Replied 02 July 2018

Agree with Mr Hemanth.

Only Manufacturers of goods, Dealers, and Restaurants (not serving alcohol) can opt for composition scheme.

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percy (B.Com) (370 Points)
Replied 02 July 2018

I too agree...but now look at this ...from example.. photo copying...it is included in services though there is abt 70 perct inputs cost of paper..ink.. electric ity etc....
govt will any way get 12 or 18 Perct from this inputs....then this type of so many lines like beauty parlour etc are included vin servitude...I THINK IT IS HASSLE FOR SMALL BUSSINESS UNITS....

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HEMANTH RANKA (Tax & Financial Consultants) (360 Points)
Replied 02 July 2018

If composition scheme is brought for services providers government will have to give many exceptions/exculsions which will make the law more cumbersome and will cause many litigations also. Further you should apprecitate that in order to safeguard small business units government has given cap of 20 lakhs for GST registration.

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percy (B.Com) (370 Points)
Replied 02 July 2018

I today's age 20 lakhs turn over even road side pan ka thelawala will do....

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HEMANTH RANKA (Tax & Financial Consultants) (360 Points)
Replied 02 July 2018

I have not come across such PAN walas. Your question was about why services have been excluded from composition scheme and I think I have answered you fairly.

May be you can write a letter to GST council to consider your points and you may include this 20 lakhs PAN Wala Point in that.

1 Like

percy (B.Com) (370 Points)
Replied 03 July 2018

sorry if u found this example offensivd ..it was jst a way of saying ...
point is there nare many n services which carry hugh input cost yet are counted as pure service..that it