Extend GST Composition Scheme to Service Sector : ICAI

Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India

14. Availability of Composition Scheme to various assessees

Section 10 of the CGST Act, 2017 provides for Composition Scheme availability to registered persons whose aggregate turnover in the preceding financial year did not exceed Rs. 75 lakh.

Issue

The benefit of composition scheme is available for works contract as defined in clause (119) of section 2 & supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

However, composition scheme is not available for other set of services not eligible for input tax credit like outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, rent- a cab etc. as provided under section 17(5)(b). Moreover, input tax credit is not allowed in such supplies except when used for making outward supply of the same category.

This goes against the very intention of GST which was believed to bring manufacturers, traders and service providers at parity. Such a provision may prejudice the interests of small service providers not wanting to undertake the lengthy compliances applicable to a normal supplier. This may further encourage tax evasion.

Suggestion

It is suggested that option of paying tax under Section 10 should also be extended to goods and services covered under section 17(5)(b), (c) & (d) and services provided by professionals having small turnover.

Read ICAI Suggestions on GST Act to Govt : July 2017

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