Amendments in Composition Scheme under GST and inclusion of Supplier of Service under the Scheme.

With a first meeting in a new calendar year of 2019 GST council has come up with a relaxing exhale for MSME units and small traders by introducing some essential changes to the policy and procedure under the GST Act.  Some important and “must know” features are as follows:

1. Threshold Limit: Council has provided two thresholds limits i.e. INR 20 Lakh and INR 40 Lakh, for registration and payment of GST for the supply of Goods and State Governments has to decide the respective limits. There is no change in case of “Service Provider” as the threshold stands continue at INR 20 Lakh and in special category states INR 10 Lakh. 

Existing limit – INR 20 Lakh

New Limit – INR 40 Lakh

*Only for supplier of “Goods” 

2. Turnover Limit under Composition Scheme: The annual turnover limit for the preceding financial year in order to avail the composition scheme benefit has been increased from INR 1 Crore to INR 1.5 Crore.  However, the special category states are provided a time limit of one week whether to accept the new amendment or not. 

Existing limit – INR 1 Crore

New Limit – INR 1.5 Crore

*Annual Turnover of preceding financial year.

3. Composition Scheme for Service Provider: Council has decided to provide a benefit of composition scheme to service providers also, which was not so till now.  The threshold limit of turnover in the preceding financial year would be INR 50 Lakh for supplier of services or mixed suppliers with a Tax Rate of 6% (3% CGST + 3% SGST).  There will be liability of filing one Annual Return with paying taxes on quarterly basis with a prescribed declaration. 

Threshold Limit – INR 50 Lakhs

Applicable to – Supplier of Service or Mixed supplier i.e. provider of goods as well as services

Tax Rate: 3% CGST + 3% SCGS (Total 6%). 

4. Simplification of Compliance: Compliance norms has been simplified under composition scheme, as there would be now only Annual Return filing with liability of paying tax quarterly along with a declaration. 

Only Annual Return filing

Payment of Tax quarterly

5. Natural Calamity Revenue Mobilization: Council has approved a levy of Cess on Intra-State Supply of Goods and Services within the state of Kerala maximum upto 1% for maximum 2 years

Additional Cess- >= 1%

Maximum for 2 years

Only in Kerela

6. Effective Date: This amendment shall come into force with effect from 01st April, 2019.

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26 Comments

  1. vishnu says:

    Hi Sir,
    I am into facility management, taking care of upkeep of layouts , gardens in it and road cleaning, site cleaning and security arrangements. Can I opt for composition tax slab of 6% if turn over is below 50 lakhs for current financial year. Company ws registered in April 2019.

  2. rajeev gupt says:

    hello sir,
    i was having a doubt one of my friend is into a business of providing services of mandap for marraige.
    Will he come under composition scheme???

    1. dave.miraj@gmail.com says:

      @Rajivji,
      Yes supplier of mandap service may opt for composition scheme @ 6%, subject to turnover in preceding Financial Year was upto Rs. 1.5 Crore.

  3. ASHOK says:

    I HAVE 10 ROOM HOTEL MY TURNOVER IN 2018-19 WAS 36 LAKHS CAN I GO FOR NEW GST COMPOSITION SCHEME 20 LAKH EXEMPT AND BALANCE 30 LAKHS 6 % RATE

    1. dave.miraj@gmail.com says:

      You may opt for Composition scheme from FY 2019-20 and that is also subject to you do not supply service to any registered person falling out of your state (inter-state supply).

  4. ASHOK KUMAR KANUNGA says:

    composition scheme – Trader — paying 1% GST oN goods –also providing SERVICE getting resident rent — is taxable ? — if yes, at what rate, and commercial rent is taxable — if yes, at what rate?

    1. dave.miraj@gmail.com says:

      In case you want to go for composition as a mix supplier i.e. supplier of goods as well as services the rate will be 3% CGST + 3% SGST = 6% GST. Further, if you dont opt for composition scheme Rent income for residential or commercial property is liable to GST @18%.

  5. Usha says:

    2019-2020 GST composition scheme applicable for service providers also. Is service provider occasionally offering inter-state service, eligible for composition scheme?

  6. KARISHMA SHIRODKAR says:

    SIR,
    AT PRESENT I M A REGULAR DEALER IN GST N I M MANUFACTURER.
    IF I OPT FOR COMPOSITION SCHEME , WOULD I ABLE TO DO INTERSTATE SUPPLY.

  7. PAWAN KUMAR says:

    1. Composition Scheme for Service Provider not available for new registration and regular taxpayer trf composition scheme from what time start date ??

    1. dave.miraj@gmail.com says:

      The category of mutual fund adviser is still debatable in an industry, however in my opinion mutual fund advisers are liable to registration under Section 24(vii) of GST Act. And to the answer of second question, you may opt for composition scheme.

  8. Anita Garg says:

    Hello Mr Vyas
    As per council recommendations, A composition scheme shall be made available for suppliers of services (or mixed suppliers) with a tax rate of 6% (3% CGST + 3% SGST) having an annual turnover in preceding financial year upto Rs 50 lakhs. In this regard my question is whether the same is applicable to Inter-state supply service provider also?

  9. Rohit says:

    Hi,

    I would like to know if there is any rebate on tax for Sports academy who are giving coaching in Tennis or Badminton or Cricket Players.

  10. N. Debnath says:

    Hallo Sir,
    I am belong from Assam. In Assam existing threshold limit is 20 Lacks earlier it was 10 lacks. Is it will be 40 lacks w.e.f. 01/04/19 in Assam or 20 lacks
    Please reply,
    Regards,
    N.Debanth

    1. dave.miraj@gmail.com says:

      For, specified states council has recommended 20 lacks, however it is left to state government to decide the final threshold limit.

  11. mahesh says:

    Hello Sir, i am really happy with your post , i have an doubt we are into diesel generator Service also we use to Supply Consumables like Filters, Engine oil Coolant etc.
    My Doubt is How our turnover will be considered as a service provider, is it like only service Charges or Ser. Charges + Supply of Materials.
    Preceding FY Turnover Around 30 Lacs in that Service Charges alone 15 Lacs there whether we can avoid GST registration as per threshold limit Is 20 Lacs for Service provider.
    i am awaiting for your Valuable advice

    Thanking you

    1. CS Miraj Dave says:

      Dear Mr. Vyas

      First of all you have to understand that, the threshold limit considers aggregate turnover i.e. Supply of goods and services as well; so you are obliged to get registered and comply with the GST Acts and Rules.

      These amendments are applicable wef 01/04/2019 so you have to consider aggregate turnover of FY 2018-19, if it is below 40 Lakh you may fall out of mandate.

      However, if you are an authorized agent of any brand holding company or a franchisee, than it is compulsory for you to comply with GST Rules.

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