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GST for supplier of service under composition scheme

05 March 2024

If a supplier of service, who is under composition scheme, supplies works contract service, can he submit bill to the tax deductor on the full estimate of the work? Or he has to reduce 18% (suppose the GST rate on the works contract is 18%) from the estimate amount? He has to pay 6% GST as he is under composition scheme.

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7 Replies

CA Rashmi Gandhi (Chartered Accountant) (86461 Points)
Replied 06 March 2024

Submit invoice on full estimate

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Laltha Zuala (153 Points)
Replied 06 March 2024

Thank you for the response, ma'am. But I have some doubts, so please help me. If he is submitting invoice on full amount, will that mean he is collecting GST while the law says that composition taxpayer cannot collect GST?

CA Rashmi Gandhi (Chartered Accountant) (86461 Points)
Replied 06 March 2024

But he is not collecting GST and compositional dealers are not allowed to collect GST.

Laltha Zuala (153 Points)
Replied 06 March 2024

Ma'am, what I am thinking is that the works contract full estimate (suppose it is under Govt) is inclusive of GST. Therefore, I am afraid that he may be collecting GST if he submit invoice on full estimate. Please enlighten me on the intricacies of the matter.

CA Rashmi Gandhi (Chartered Accountant) (86461 Points)
Replied 09 March 2024

The amount is inclusive of GST but you are not allowed to claim ITC on such amount and accordingly the amount is added to the work contract cost.

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Laltha Zuala (153 Points)
Replied 09 March 2024

Okay. Thank you for the very precise answer. That means, works contractor opting for composition can issue invoice on the full estimate amount and will not receive any adjudication from GST officers since he did not claim ITC. Is that correct?

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