For small service providers & start ups, compliance in GST regime will be time consuming and cumbersome. Provisions to protect the interest of such small service providers are often found in the earlier taxing statutes. For simplifying service providers Scheme of composition for service providers provided with effect from 01st April, 2019
A registered person whose aggregate turnover in the preceding financial year did not exceed Rs. 50 lakhs may opt for composition levy. Under this scheme, Tax Payer pays tax only at a certain percentage of his turnover.
Eligible businesses opt this scheme if they are not engaged in:-
- business who is not eligible under Composite Scheme of Goods [Section 10]
- supply of goods/services which are not leviable under GST
- making inter-state outward supply [inter-state purchase are permitted]
- supply of goods through an e-commerce operator
- manufacture of specific notified goods [Ice cream, Pan masala, Tobacco]
- as a casual taxable and non resident taxable person
|Service Provider||Rate of tax [CGST + SGST]|
|First supplies of goods or services or both upto an aggregate turnover of Rs. 50 lakh||6 % [3% CGST + 3% SGST]|
Points to consider
- Simple to understand, less compliance. Tax payment & GST Returns are quarterly.
- Suitable for businesses that are making direct sales to consumers [B2C]
- Person neither collects tax from customer on services nor take any the input credit on service/goods
- Person will be required to pay GST on regular rate if
- item is covered under Reverse Charges [RCM]
- purchase from unregistered person and input tax credit is not allowed.
- Every Bill of Supply issued shall carry the declaration on top of the bill “taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies”
- Every notice or signboard in place of business displayed “Composite Taxable Person”