Composition Scheme

[Siddharaj Deora]

Are works contract covered under composition scheme? If not, whether any abatement is provided as in Service Tax? And what rate will apply for supply of goods and supply of services?

[DR.MARIAPPAN GOVINDARAJAN]

Section 10(2) of CGST Act provides that the registered person shall be eligible to opt under composition scheme, if-

(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of para 6 of Schedule II;

(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods;

(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and

(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council.

If you are covered under any of the above five categories you are not eligible to avail composition scheme.

The rate has not yet been finalized and so the abatement etc.,

[Ganeshan Kalyani]

In my view, works contract is not covered under composition scheme under draft law.

Yes rate is yet to be finalised itemwise.

[Himansu Sekhar]

It appears the works contracts are in clause a of paragraph 6 of schedule-II. Not eligible for composition scheme.

[subramanian vijayakumar]

Works. Contract. Will not come under composition scheme.as it id considered. As Service. And no service could opt for compo

AI Summary

Works Contracts Not Eligible for GST Composition Scheme Under Section 10(2) of CGST Act, Say Forum Participants. A discussion on a forum addressed whether works contracts fall under the GST composition scheme. Four participants responded, agreeing that works contracts are not eligible for the composition scheme. They highlighted that Section 10(2) of the CGST Act outlines specific conditions under which a person can opt for the scheme, and works contracts do not meet these criteria. Additionally, the rate for such contracts has not been finalized, and no abatement similar to Service Tax is currently provided. The consensus was that works contracts are considered services and thus cannot opt for the composition scheme.