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| Composition Scheme for small Service Providers |
CBIC has issued notification 2/2019 CT(R) which provides a composition scheme for the Service provider in a more of a twisted mode.
The notification is applicable to First supplies of goods or services upto Rs. 50 Lakhs made after 1st April of the Financial year shall be taxed at 6% without any ITC.
Further One of the condition to opt for the above scheme is that the person should not be eligible to pay tax under 10(1) of the Act. So this notification covers predominantly the person engaged in providing service wants to opt for Composition Scheme. The issue is, if such a person supplies any goods, he shall be liable to pay tax 6% on such goods as well.
The registered person shall mention the following words at the top of the bill of supply, namely: -
"Taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies’
Further for the first time Section 9(4) shall be operational after 13th October 2017. Any purchase from an unregistered person by the person notified under this notification shall be taxable under section 9(4). Provisions of Section 9(3) shall also be applicable to such person.
Further In computing aggregate turnover in order to determine eligibility of a registered person to
pay central tax at the rate of three percent under this notification, value of supply of exempt
services by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount, shall not be taken into account.
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