Composition scheme

This query is : Resolved

Imraan Khan (Querist)
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11 June 2019 We have a man power supplier who bills nearly for Rs.2 crores/anum. Now my HR wants to split the single man power supplier in to 4 so as to get benefit under composition scheme for service providers which is 6% if annual turnver below Rs.50 lacs. Earlier we used to pay 18%. is it right to do so. plz mention consequences also.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 June 2019 GST is a pass through item for 18%. Composition scheme will not allow pass through of 6% GST, so to that extent it's a loss to you.
Besides penal proceedings and you have to bear GST 6% this option is not advisable.

Imraan Khan

Imraan Khan (Querist)
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11 June 2019 Ours is a Dairy products manufacturing company and most of our products are not taxable. we cannot claim input tax credit. thats why HR proposing to have 4 man power supplier (service providers) so that we can pay only 6% GST.

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 June 2019 No problem you can do so.