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Your opinion require on composition scheme...

17 May 2012

I need ur advise...a construction company for paying its service tax opted for Composition scheme...in that case its loosing input service benefits...like credit on telephone bills,repair & maintenance....what would more beneficial for company....composition scheme or normal provisions???

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6 Replies

Karthikeya2020 (Student) (2030 Points)
Replied 17 May 2012

If u want benefits of input service and then u have to register & avail benefits of input service...

So its better to don't opt for composition scheme..

Makk P (Finance Officer) (126 Points)
Replied 17 May 2012

Its difer from company to company that which option is better for it.

If a company has more amount of inpur service tax credit then output service tax then it should opt normal scheme and vice a versa.

Karthikeya2020 (Student) (2030 Points)
Replied 17 May 2012

@ Makk P,

If a company under which scheme is benefit then opt for that scheme..

U should tell about ur scheme for using in the contract to service reciever (i.e., composition or normal scheme) and go for it .

CA Sudhir Maheshwari (CA) (270 Points)
Replied 17 May 2012

Correct me if i m wrong....in case of output service tax, being a indirect tax, company will collect it from its customer..pay it to government after taking input service benefit....but in case of composition scheme...company would not get any tax from its customer inspite of getting it from customer...it has to pay composition tax from its pocket...so i want to know what is the benefit of composition scheme in monetary terms....

RAVITOSH KUMAR (Executive) (324 Points)
Replied 17 May 2012

the rate in composition scheme is marginal as compared to normal tax rate. so you need to evaluate which is more beneficial considering the turnover of the company based on estimate

CA Ganesh Karthik (Chartered Accountant) (368 Points)
Replied 18 May 2012

Hi Sudhir,

I dont think there's such provision in Service tax that you cannot collect the Composition Tax from the service receivers..

Such provision is there under VAT laws of few states.

But under serivce tax, under composition scheme, the service tax can be collected rom the service receiver and the service receiver can claim the input credit also.. Pls correct me if you have found any provisions denying the service provider to collect the tax from the recepient of service..

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