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

Composition scheme eligibility: works contracts are treated as services and thus excluded, with rates and abatements pending. Section 10(2) disqualifies a registered person from the composition scheme if engaged in specified activities including supplies of services (except certain Schedule II supplies), inter-State outward supplies, supplies through an e-commerce operator required to collect tax, supplies of goods not leviable under the Act, or manufacture of notified goods. Contributors agree works contracts are treated as services under paragraph 6 of Schedule II and thus are excluded from composition. Applicable composition rates and abatement provisions were not finalized at the time of the discussion.