• Composition scheme for Service sector.

Please answer my questions carefully after reading it completely (because previously I received answers wherein it was very obvious the CA hadn’t read the questions at all) :

1. XYZ (a proprietary) firm is into renting and servicing of refrigerators and washing machines, they are currently registered under GST as a service and paying 18% GST. 
Turnover hasn’t crossed even 20 lacs in the previous 2 years and neither it is expected to do so in the current year. Firm does not sell online. Firm does not sell their services inter-state. 

a.	Can they opt for new composition scheme for service sectors wherein they are required to pay 6% GST and file returns quarterly?
b.	Servicing + renting is possible under the same registration opting for composition?
c.	How much GST would it have to charge for renting out refrigerators if it opts for composition scheme? Would it be the same (6%)?
d.	Can this (proprietary) firm transfer GST registration to others?
 
2. ABC (a proprietary) firm is into maintenance and repair service of transport machinery and equipment (SAC 998714), hasn’t crossed 50 lacs in previous 2 years, and neither does it sell its services inter-state, can it opt for service composition scheme (6%) ?

Thanks.
Awaiting your reply.
Asked 10 days ago in GST from Bengaluru, Karnataka

1. If he is just providing service then why has he taken registration if his turnover is below 20 lakh?

Also this option needs to be selected in the start of year and you cant switch from normal scheme to composition scheme between the year but the reverse can be done. But since this is the first year of composition scheme for service provider the date to opt for composition scheme has been kept at 30th September.

2. Yes once you apply for composition supply on your GST number it is applicable on all services you provide.

3. If you are opting for composition scheme you cant charge separate GST nor can you issue tax invoice, you have to issue bill of supply without mentioning GST amount.

4. One cannot transfer GST registration as GST is PAN based registration but you can transfer ITC on sale of busienss using ITC 02 form.

 

2. Yes they can opt for composition scheme.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
1981 Answers
17 Consultations

5.0 on 5.0

Hello,

 

1.a Yes, XYZ firm can opt for composition scheme available for service providers. The deadline to opt for the scheme for F.Y. 2019-20 is 30th Sept 2019.

b. Yes, both would be covered under the composition scheme.

c. Yes, 6% for every service you provide under the same GST registration.

d. Transfering GST registration won't be possible.

 

2. Yes, ABC Firm can opt for the composition scheme.

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Neemuch
794 Answers
1 Consultation

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

1 a. Yes, they can opt for new composition scheme for wherein they are required to pay 6% GST and file returns quarterly.

 

b. Yes, Servicing + renting is possible under the same registration opting for composition.

 

c.Yes, it would be 6%.

 

d.No, GST registration transfer is not possible.

 

2. Yes, they can opt for composition scheme.

Payal Chhajed
CA, Mumbai
2853 Answers
39 Consultations

5.0 on 5.0

A composition dealer cannot collect GST from customers. He has to pay the GST from its own pocket @6% on sales.

Lakshita Bhandari
CA, Mumbai
3545 Answers
174 Consultations

5.0 on 5.0

Composition dealer cannot collect GST from their customers. Composition dealer issues bill of supply and doesn't collects any GST and pays the due tax as his expense.

A Regular dealer issues the bill of supply and collects the due GST from his customers.

 

Hunny Badlani
CA, Neemuch
794 Answers
1 Consultation

5.0 on 5.0

Dear Sir,

 

No, the service provider GST dealer opting for composition scheme can not collect 6% GST from customers.

 

 

 

Payal Chhajed
CA, Mumbai
2853 Answers
39 Consultations

5.0 on 5.0

No sir he cant collect 6% GST thats why many people think twice before opting for composition scheme. Yes he will pay 6% flat on sale amount.

Naman Maloo
CA, Jaipur
1981 Answers
17 Consultations

5.0 on 5.0

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