watch_later 01/04/19


I am  purely, a service provider, running a consultancy firm. Can I apply for GST registration as a composition dealer and if so, what is the threshold limit.

Kindly advice.

1 Response | Latest response: 01/04/19 | Sort by Likes(thumb_up) Recent | GST Reply
watch_later 01/04/19


  • GST composition scheme for small service providers

As per the CGST (Amendment) Act, 2018, A composition scheme shall be introduced for supplier of services having a turnover of up to Rs 50 lakh. The service providers opting for composition scheme can pay tax at a rate of 6% (CGST 3% + SGST 3%) on their turnover and would not be eligible to avail any input tax. The said scheme shall be applicable across all service providers. The service providers covered under the Composition Scheme shall be required to file 1 annual return and make quarterly payment of GST.

Who can-not opt for composition scheme: -

  • Service providers except for restaurant operators (food and soft drinks)
  • Providers of non-taxable goods
  • When the person delivers goods between states (Inter state supplies)
  • Providers who provide goods through an e-commerce operator eligible to collect TCS
  • Supplier of tobacco, pan masala, and ice cream

Since the dealer of the COMPOSITION SCHEME cannot pass on the tax credit, he must issue the bill of supply. A Composition Dealer has to issue Bill of Supply. They cannot issue a tax invoice. This is because the tax has to be paid by the dealer out of pocket. A Composition Dealer is not allowed to recover the GST from the customers. Any composition dealer can purchase from other states, there is no restriction in purchasing other from other state, however, he cannot make supply to other state. His supply is restricted to intra-state only.

Secondly, he cannot claim ITC on purchase either Intra state or Inter State and cannot charge GST on supply.

Composition is facility for a dealer upto Rs. 1.5 crore p.a. who is buy and sold merchandise within the state only The cardinal principle of this laws, that any interstate business amount a liability to get a regular registration.

As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.50 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, 2019. Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.


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