Composition Scheme for Service Providers (Notification 2/2019 – Central Tax Rate)

Government has come up with composition scheme for small service providers and scheme is applicable for invoices issued by a person on or after April 01, 2019 for this financial year. This scheme is applicable only when person is not eligible to pay tax under section 10(1) of CGST Act, 2017 since section 10(1) doesn’t extend benefit to service providers.

A person who opts to pay tax as per this scheme, shall pay Central tax @ 3% (6% total tax) on first supplies of goods or services or both from April 1, 2019 and up-to turnover of Rs. 50 Lakhs. After 50 lakhs, he shall pay normal tax.

Conditions to avail this scheme:

1.His aggregate turnover in preceding F.Y. should be up-to Rs.50 Lakhs. It includes exempt supplies but excluding exempt supplies by way of extending deposits or loan or advances.

2.He is not engaged in making supplies not leviable to tax;

3.He is not engaged in making Inter-State supplies;

4.He should not be a casual taxable person or non-resident person;

5.He is not engaged in making supplies through electronic commerce operator;

6.He is not engaged in supply of ice-cream, pan masala, tobacco etc.

7.His each registered premises should also opt to pay tax under this notification.

8.He should not collect GST from customers;

9.He should reverse ITC, if any, held in stock and capital goods.