In this article, we’re going to take a closer look for a composition scheme for the persons who are exclusively engaged in the supply of services.

Can the persons who are exclusively engaged in the supply of services opt for a composition levy?


The persons who are exclusively engaged in the supply of services cannot opt for composition except those providing restaurant or catering services.
However, the suppliers who are ineligible for composition levy as per Section 10(1) can opt for the Composition scheme under Section 10(2A) provided their aggregate turnover in the preceding financial year does not exceed fifty lakh rupees.

Can a manufacturer, trader other than restaurant or catering service supply services? If yes, then specify the limit?


As per Sec 10(1), the trader or manufacturer cannot supply services exceeding 10% of turnover in state or union territory of the preceding financial year or five lakh rupees, whichever is higher.

What is the difference between the composition levy u/s 10(1) and Section 10(2A)?


Particulars Composition Levy u/s 10(1) Composition Levy u/s 10(2A)
Eligible persons Manufacturer, Trader, Restaurant/Catering services Supplier of services, Every person who is ineligible u/s 10(1)
Threshold limit for composite levy The aggregate turnover in the preceding financial year shall not exceed one crore and fifty lakhs only. The aggregate turnover in the preceding financial year shall not exceed fifty lakh rupees.
Aggregate turnover limit for the special category states The threshold for aggregate turnover for these states shall be seventy-five lakh rupees (except for the states of Assam, Himachal Pradesh, and Jammu & Kashmir). The threshold for aggregate turnover for these states shall be fifty lakh rupees.
Composite rates for manufacturer 1% of turnover in the state Not applicable
Composite rates for trader 1% of turnover in the state Not applicable
Composite rates for service 5% of turnover in the state (restaurant/catering services) 6% of turnover in the state (only eligible persons)

What are the special category states where the applicable turnover limit is fifty lakh rupees u/s 10(2A)?


The following are the special category states where the applicable turnover limit is seventy-five lakh rupees.

  • Arunachal Pradesh
  • Manipur
  • Meghalaya
  • Mizoram
  • Nagaland
  • Sikkim
  • Tripura
  • Uttarakhand
  • Assam
  • Himachal Pradesh
  • Jammu & Kashmir