Composition Scheme - Section 10(2A) for Service Providers and Mixed Suppliers
## Composition Scheme under Section 10(2A)
### Purpose
This scheme extends composition benefits to persons not eligible under Section 10(1) and 10(2), such as:
Service providers (other than restaurants)
Mixed suppliers of goods AND services exceeding earlier sub-limit
### Eligibility Threshold
Aggregate turnover in the preceding financial year must not exceed ₹ 50 lacs (across India).
Note: This is a uniform limit across all states (no special category distinction).
### Applicable Tax Rate
CGST 3% + SGST 3% = Total 6% on turnover in State/UT (includes taxable + exempt supplies).
### Key Comparison
Feature
Section 10(1)/(2)
Section 10(2A)
Eligible Suppliers
Goods + Restaurant
Mainly Services + Mixed
Threshold
₹1.5 Cr / ₹75 lacs
₹50 lacs
Tax Rate (Manufacturer)
1%
N/A
Tax Rate (Restaurant)
5%
N/A
Tax Rate (Trader)
1% on taxable
N/A
Tax Rate (Service composition)
N/A
6%
Tax Base
Turnover in State (taxable for traders)
Turnover in State/UT
### Conditions Specific to Section 10(2A)
Available only when person is NOT eligible under Section 10(1)/(2).
Service providers including those who supply services along with goods (where the value of services exceeds permitted limit under main composition scheme).
Worked example
### Example 1
Example - Service Provider: Mr. S, a beauty parlour operator in Delhi with aggregate turnover of ₹ 40 lacs in PY. State turnover = ₹ 35 lacs taxable + ₹ 5 lacs exempt.
→ Not eligible under 10(1)/(2) (he supplies services other than restaurant). Eligible under 10(2A) (₹40 lacs ≤ ₹50 lacs).
Example - Mixed Supplier: Mr. M provides both goods and services with aggregate turnover of ₹45 lacs, services being significant. Not fitting under 10(1)/(2).
→ Can opt 10(2A) at 6% on turnover in state/UT.
⚠️ Common exam mistakes
Applying ₹1.5 Cr threshold to service providers under 10(2A) - the limit is ₹50 lacs
Applying 1% rate (instead of 6%) on service composition - 10(2A) attracts 6% total
Allowing both 10(1)/(2) AND 10(2A) at same time - a person opts under one or the other
Computing 10(2A) tax on taxable supplies only - it's on turnover in state/UT (including exempt)
Bare-Act text Section 10(2A) · CGST Act, 2017 · click to expand
Notwithstanding anything to the contrary contained in this Act, a registered person, not eligible to opt to pay tax under sub-sections (1) and (2), whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the central tax payable by him under sub-section (1) of section 9, an amount of central tax calculated at such rate as may be prescribed, but not exceeding three per cent of the turnover in State or turnover in Union territory.