TaxTMI 
TaxTMI 
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?
Composition Scheme
02 May 2017 
4 Replies 
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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. (AI Summary)
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. (AI Summary)