Composition Scheme for Service Providers 2020-21

Home » Learn » GST in India » Composition Scheme for Service Providers 2020-21

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:


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 –

  1. Aggregate turnover of the supplier should be INR 50 Lakhs or less in the preceding financial year.
  2. The supplier should not be eligible to pay tax under section 10 (1) of the Act.
  3. The supplier should not be engaged in making supply which is not leviable to tax.
  4. The supplier should not be engaged in making any inter-state supply.
  5. The supplier should not be a casual taxable person.
  6. The supplier should not be a non-resident taxable person.
  7. The supplier should not be engaged in making supplies through an e-commerce operator who is required to collect tax u/s 52.
  8. 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

  1. The supplier cannot collect any tax from the recipient of supplies.
  2. The supplier cannot avail input tax credit of tax so paid.
  3. 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’.
  4. 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 7th March 2019 would be effective from 1st April 2019.

Other Related Guides

GST on residential, commercial and religious prope... GST on residential, commercial and religious property GST law clearly includes renting out of the immovable property within the ambit of supply of se...
GST on Directors Remuneration GST on Directors Remuneration Directors remuneration is paid for the services offered by the Director of the concerned company. In this article, let ...
GST on Used Goods – Margin Scheme GST on Used Goods - Margin Scheme As per the GST Council, GST shall apply to used goods or second hand goods as tax applies on the transaction value....
GST Inspection of Goods in Transit GST Inspection and Confiscation of Goods in Transit GST E-way bill regulations are being rolled out and streamlined across India. Currently, the GST ...
Reverse Charge Mechanism Applicability Reverse Charge Mechanism Applicability The provisions relating to the levy of reverse charge mechanism with respect to goods or services or both rece...

Post by Shushma

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.