GST Composition Scheme for Services 2019 (Conditions to claim)

GST Composition Scheme for Services 2019, Conditions to claim GST Composition Scheme for Services. The Government has introduced a composition levy under GST Law to simplify the taxing mechanism for small taxpayers to keep up with GST Compliance.

Conditions to claim GST Composition Scheme for Services:

  • Turnover in Previous Year (i.e. FY 2018-19) should be Rs. 50 lacs or below.
  • Not opted for composition under section 10(1) of CGST Act.
  • Not engaged in making any supply which is not leviable to tax under GST.
  • No Inter-State Supply.
  • Neither a Casual Person nor a Non-Resident Taxable Person.
  • Cannot make supply through E-Commerce who is required to collect TCS u/s 52
  • More than one registrations taken on same PAN then all registered persons should pay tax @6%
  • No Tax shall be collected from the recipient.
  • No ITC available.
  • ‘BILL OF SUPPLY’ shall be issued instead of Tax Invoice.
  • Following shall be mention at the top of bill of supply:
    ‘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’.
  • Paying tax under this notification then he is required to pay tax @6% on all types of supplies of goods or services or both notwithstanding any other notification issued under sub-section (1) of section 9 or under section 11 of said Act.
  • To pay RCM on inward supplies under sub-section (3) or sub-section (4) of section 9 of said Act at the applicable rates.
  • Value of supply of exempt services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account for computing aggregate turnover in order to determine limit of 50 Lakhs.
  • Not engaged in making supply of goods i.e. Ice-Cream, Pan Masala and Tobacco.

This notification shall come into force on the 1st day of April, 2019.

Composition scheme for supplier of services:

i. Supply of following type of options is available under this scheme : 

  • Supply of goods only. (Subject to condition no. ii)
  • Supply of services only.
  • Supply of combination of goods and/or services.
  • Supply of mixture of goods and/or services.

ii. Supply of following goods does not qualify for composition scheme : 

  • Ice cream and other edible ice, whether or not containing cocoa. 
  • Pan masala.
  • All goods under Chapter 24, i.e. Tobacco and manufactured tobacco substitutes.

iii. Composition scheme applies to first supplies of goods or services or both upto an aggregate turnover of Rs. 50 lakh rupees made on or after 01st April in any financial year. Thereafter assessee would be deemed to fall in present taxation structure.

iv. Aggregate turnover includes exempt supplies as well.

v. Exempt supplies by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account while considering aggregate turnover.

vi. Aggregate turnover in the preceding financial year should be Rs. 50 lakhs or below (32nd GST Council meet)

vii. A rate of 6% (total) is specified for outward supplies of such composition scheme.

viii. Assessee should not be eligible to pay tax under composition scheme of traders, manufacturers and restaurant service providers u/s 10 of the Act.

ix. Non-GST supply is not allowed.

x. Inter-state supplies are not allowed.

xi. Assessee should neither be a casual taxable person nor a non-resident taxable person.

xii. Assessee should not be engaged in making any supply through an electronic commerce operator.

xiii. Where an assessee holds more than a single registration, all such registrations should uniformly follow such rate of composition.

xiv. Output tax should not be separately collected from the recipient of supplies.

xv. Input tax credit would be totally barred.

xvi. A bill of supply is to be issued on each supply.

xvii. Bill of supply should contain words ‘taxable person paying tax in terms of Notification No. 2/2019 – Central Tax (Rate)

xviii. RCM liability under section 9 (3) or 9 (4) will remain in force for assesses opting composition scheme.

xix. Such composition scheme would be applicable from 01/04/2019.