Composition Scheme for Service Providers 2020-21

Due to the impact of Corona Virus, the lives of the people became highly unstable and the Governments across the globe struggles to lift back the manufacturing and industrial sector. The impact of the devastation forced Governments to lockdown their countries wholly or partially. To create a stable economic platform, the Government of India slashed and waived all the penalties and postponed to pay taxes for people. As a result, many taxpayers unable to register or avail schemes due to lockdown of all central and state departments. However, the GoI extended time period for filing taxes and to avail schemes. As such, through the Notification No. 30/2020, the Central Board of Indirect Taxes and Customs implemented Central Goods and Services Tax (Fourth Amendment) Rules, 2020. In the Fourth Amendment, the CBIC notified that the taxpayer liable to taxes for the Composition Scheme for the year 2020-21, the taxpayer may choose to file the taxes by: Sending an intimation in

Form GST CMP-02, signed and verified through an electronic code through the GST Portal and furnish the statement in Form GST ITC-03 as per rule 44 on or before 31st July 2020 or The taxpayer may also choose to file directly through a Facilitation Centre as notified by the Commissioner on or before 30th June 2020. Existing taxpayers for Composition Scheme, should not file in GSTR-1 or GSTR-3B for the tax period of 2020-21. Filing in GSTR-1 or GSTR-3B shall be considered as not registered for the Composition Scheme. To continue with the Composition Scheme, the taxpayer need not re-opt to avail the Composition Scheme as it avails automatically. Note: This shall apply only during the lockdown period. After the ban of the lockdown period, the below-mentioned procedures shall apply. For more details on the notification, Scroll down:

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In order to come up with various solutions, the

Goods and Service Tax Council meets up frequently and comes up with various decisions. The 32nd Goods and Service Tax Council meeting was held on 10th January 2019, wherein, the various major decision was taken. One such decision was eligibility/availability of composition scheme for service providers and mixed suppliers which were earlier not available. In order to implement the said decision of Goods and Service Tax Council, the Central Board of Indirect Taxes and Customs have issued a notification no. 2/2019-Central Tax (Rate) dated 7th March 2019 and the same is taken up in the present article.

Coverage of Supplies

The registered person supplying goods or services or both up to an aggregate turnover of INR 50 Lakhs.

Rate of Tax –

6% (3% CGST + 3% SGST)

Condition for Availment of Composition Scheme –

Aggregate turnover of the supplier should be INR 50 Lakhs or less in the preceding financial year.
The supplier should not be eligible to pay tax under section 10 (1) of the Act.
The supplier should not be engaged in making supply which is not leviable to tax.
The supplier should not be engaged in making any inter-state supply.
The supplier should not be a casual taxable person.
The supplier should not be a non-resident taxable person.
The supplier should not be engaged in making supplies through an e-commerce operator who is required to collect tax u/s 52.
The supplier should not be engaged in making supplies of following

Sr. No.	Tariff	Description
1	2105 00 00	Ice cream and other edible ice, whether or not containing cocoa
2	2106 90 20	Pan masala
3	24	All goods i.e. tobacco and manufactured tobacco substitutes

Other Important Conditions

The supplier cannot collect any tax from the recipient of supplies.
The supplier cannot avail input tax credit of tax so paid.
The supplier, instead of a tax invoice, is required to issue a bill of supply. The supplier is also required to mention ‘taxable person paying tax in terms of notification no. 02/2019- Central Tax (Rate) dated 7thMarch, 2019, not eligible to collect tax on supplies’.
The supplier opting to pay tax availing benefit of this notification is liable to pay tax under reverse charge basis on inward supplies at applicable rates.

It is important to note that the above notification no. 02/2019-Central Tax (Rate) dated 7

th March 2019 would be effective from 1st April 2019.

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Frequently Asked Questions

Common questions about GST Composition Scheme 2020 for Service Providers.

The Composition Scheme for Service Providers is a scheme introduced by the Goods and Service Tax Council, allowing registered service providers and mixed suppliers with an aggregate turnover of up to INR 50 Lakhs to pay tax at a concessional rate of 6% (3% CGST + 3% SGST). This scheme aims to simplify tax compliance for small businesses.

To be eligible for the Composition Scheme for Service Providers, the registered person must have an aggregate turnover of INR 50 Lakhs or less in the preceding financial year. Additionally, they must not be engaged in making supplies that are not leviable to tax, inter-state supplies, supplies through an e-commerce operator, or supplies of specific goods like ice cream, pan masala, and tobacco products.

The main benefit of opting for the Composition Scheme for Service Providers is the reduced tax rate of 6% on the turnover. Additionally, the compliance burden is reduced as the taxpayer is not required to file GSTR-1 or GSTR-3B and can instead issue a bill of supply.

No, taxpayers opting for the Composition Scheme for Service Providers cannot avail input tax credit on their inward supplies. They are also not allowed to collect tax from the recipients of their supplies.

For the financial year 2020-21, due to the COVID-19 lockdown, taxpayers can opt for the Composition Scheme for Service Providers by either sending an intimation in Form GST CMP-02 through the GST Portal or by filing directly through a Facilitation Centre notified by the Commissioner.

Yes, existing taxpayers who were already registered under the Composition Scheme need not re-opt to avail the Composition Scheme for Service Providers. Their registration will continue automatically.

Taxpayers registered under the Composition Scheme for Service Providers are not required to file GSTR-1 or GSTR-3B. Instead, they must furnish a statement in Form GST ITC-03 as per rule 44.

The Composition Scheme for Service Providers, as per notification no. 02/2019-Central Tax (Rate) dated 7th March 2019, became effective from 1st April 2019.

No, casual taxable persons and non-resident taxable persons are not eligible to opt for the Composition Scheme for Service Providers.