Conditions for COMPOSITION SCHEME for service providers
Registered person whose aggregate turnover in preceding FY is upto Rs. 50 lacs &
who is exclusively engaged in supplying services other than restaurant services &
who is not eligible to pay tax under composition scheme u/s 10
can pay tax @ 3% (3% + 3%)
on first supplies of G&/S upto Aggregate turnover of Rs. 50 lacs made on/after 1st April in any FY,
subject to specified conditions.
Who are the persons not eligible for composition scheme, but eligible for NN 2/2019?
Registered person whose aggregate turnover in preceding FY ≤ Rs. 50 lacs &
who is exclusively engaged in supplying services other than restaurant services, or
who is engaged in supply of services (other than restaurant services) along with supply of goods &/ or restaurant services of value exceeding Rs.5 lacs in current FY.
1. Supplies are made by a registered person who is not engaged in making:
Any supply (G/S) which is not leviable to tax under the said Act.
Any inter-State outward supply of G&/S.
Any supply through ECO who is required to collect tax at source u/s 52.
Supplies of Notified goods [Ice cream; Pan masala; Tobacco & manufactured tobacco substitutes].
2. Supplies are made by a registered person who is neither a CTP nor NRTP.
3. Registered person shall not collect any tax from the recipient on outward supplies made by him.
4. RP shall not be entitled to ITC.
5. Registered person shall issue a bill of supply instead of tax invoice. It shall have the following words at its top – ‘taxable person paying tax in terms of NN 2/2019, not eligible to collect tax on supplies’.
Tax Payable by Registered Person opting to pay tax under NN 2/2019
1. CGST @ 3% + SGST/UTGST @ 3% on all outward supplies – first supplies of G&/S upto an aggregate turnover of Rs. 50 lacs made on/after 1st April in any FY – regardless of any exemption available to such supplies or any notification issued u/s 9(1) &
2. CGST on inward supplies u/s 9(3) or 9(4) [RCM basis] at the applicable rates.
First Supplies of G/& S made from 1st April of FY to date of becoming liable for registration for
|Determining Eligibility of a
person to pay tax
|First supplies of G&/S shall include the supplies from 1st April of a
FY to the date from which he becomes liable for registration
|Determining Tax payable||First supplies of G&/S shall not include the supplies from 1st April of
a FY to the date from which he becomes liable for registration.
QMr. PC is not a registered person during FY 2018-19. From 1st April 2019, new FY commences. Upto August 2019, he achieves the aggregate turnover of Rs. 20 Lacs & is liable for registration under GST Laws w.e.f. 1st Set. 2019. In September 2019, he made outward supply of Rs. 30 Lakhs. From 1st October 2019 to March 2020, he made outward supply of Rs. 55 lacs. Compute GST implications under NN 2/2019.
As per NN 2/2019, Registered person whose aggregate turnover in preceding FY is upto Rs. 50 lacs & who is not eligible to pay tax under composition scheme u/s 10 can pay tax @ 3% (3% + 3%) on first supplies of G&/S upto Aggregate turnover of Rs. 50 lacs made on/after 1st April in any FY, subject to specified conditions.
His turnover of Rs 50. Lacs for recognising his benefit under this scheme (Notification No. 2/2019) will be counted from 1st April 2019. However, tax under this scheme shall be payable only for the supplies made during September (i.e. on Rs. 30 lacs). Limit of Rs. 50 Lacs under this scheme exhausted in September 2019 (i.e. Rs. 20 Lakhs before registration & Rs. 30 Lakhs after registration). From 1st october 2019 onwards (i.e on Rs. 55 lacs), tax shall be payable under normal provisions of GST as applicable for regular dealers.
SOME OTHER POINTS:
| Where more than one registered persons are having same PAN, CGST on supplies by all such registered persons is paid @ 3% under this notification. [i.e All branches shall pay tax @ 3%].
In computing aggregate turnover to determine eligibility of a registered person to pay CST @ 3% under this notification, 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. If any RP who has availed ITC opts to pay tax under this notification
CGST Rules as applicable to composition dealer shall mutatis mutandis apply to a person paying tax under this notification.
Option to pay tax by availing the benefit of this notification would be effective from the beginning of the FY or from the date of registration (in cases of new registration during FY).
Q A person availing composition scheme in Haryana during a financial year crosses the turnover of Rs. 1.5 crore during the course of the year i.e. he crosses the turnover of Rs. 1.5 crore in December? Will he be allowed to pay tax under composition scheme for the remainder of the year, i.e. till 31st March?
No. Option to pay tax under composition scheme lapses from the day on which the aggregate turnover of the person availing composition scheme during FY exceeds Rs. 1.5 crore. Once he crosses the threshold, he is required to file an intimation for withdrawal from the scheme in prescribed form within 7 days of the occurrence of such event. Every person who has furnished such an intimation, may electronically furnish at the common portal, a statement in prescribed form containing details of stock of inputs & inputs contained in semi-finished or finished goods held in stock him on the date on which the option is withdrawn, within 30 days from the date from which option is withdrawn.
Q Determine whether the supplier in the following cases are eligible for composition levy provided their turnover in preceding year does not exceed Rs. 1.5 crore:
(a) Mohan Enterprises is engaged in trading of pan masala in Rajasthan & is registered in same state
(b) Sugam Manufacturers has registered offices in Punjab & Haryana & supplies goods in neighbouring states?
(a) A supplier engaged in the manufacture of notified goods u/s 10(2)(e) [Ice cream & Pan masala & Tobacco] during preceding FY is not eligible for composition scheme. Since Mohan Enterprises is engaged in trading of Pan masala & not in the manufacture & his turnover does not exceed Rs. 1.5 crores, he is eligible for composition scheme subject to fulfilment of specified conditions.
(b) Since supplier of inter-State outward supplies of goods is not eligible for composition levy, Sugam Manufacturers is not eligible for composition levy.