Composition Scheme for Service Providers – Section 10(2A)
# Composition Scheme for Service Providers – Section 10(2A)
Section 10(2A) is the separate composition window for service providers and mixed dealers who cannot enter the Section 10(1) goods composition because they supply services (other than restaurant) beyond the marginal limit.
## 1. Eligibility
A registered person whose aggregate turnover in the preceding FY does not exceed ₹50 lakh.
Available to:
Pure service providers, and
Suppliers of goods + services where service component exceeds the marginal limit under Section 10(1).
He must NOT be:
Engaged in supply of goods or services that are not leviable to tax;
Making any inter-State outward supplies;
Supplying through an E-commerce operator required to collect TCS u/s 52;
A manufacturer of notified goods;
A casual or non-resident taxable person.
## 2. Rate of Tax
6% of turnover in State (3% CGST + 3% SGST).
Computed on first supplies of goods or services or both during the financial year (including from 1 April even before opting).
## 3. Other Conditions (same flavour as Section 10(2))
Cannot collect tax from the recipient.
No ITC can be availed.
Must mention 'composition taxable person' on signboard and on the bill of supply.
Files quarterly CMP-08 and annual GSTR-4.
## 4. Quick Comparison
Feature
Sec 10(1) – Goods
Sec 10(2A) – Services
Threshold
₹1.5 cr / ₹75 lakh
₹50 lakh
Rate
1% / 2.5% / 5%
6%
Services allowed
Up to higher of 10% TO or ₹5 lakh
Goods + services both freely allowed
Inter-State outward supplies
Not allowed
Not allowed
E-commerce (TCS) supplies
Not allowed
Not allowed
Worked example
### Example 1
Q. Ms. P, a yoga instructor in Maharashtra, has turnover of ₹40 lakh from yoga classes. She also sells yoga mats worth ₹8 lakh in the year. Can she opt for composition?\nA. Aggregate turnover ₹48 lakh ≤ ₹50 lakh, all supplies intra-State, no notified-goods manufacturing → eligible under Section 10(2A). Tax = 6% × ₹48 lakh = ₹2,88,000 (3% CGST + 3% SGST).
### Example 2
Q. A small architect firm in Bengaluru had turnover of ₹35 lakh last year, but supplies design services to one client based in Hyderabad. Can it opt for 10(2A)?\nA. No. Even one inter-State outward supply disqualifies the firm from composition, both under Section 10(1) and Section 10(2A).
⚠️ Common exam mistakes
Applying Section 10(1) (1%/2.5%/5%) to a pure service provider — pure service providers are eligible only under Section 10(2A) at 6%.
Forgetting that even under Section 10(2A) inter-State outward supplies and supplies through TCS-collecting e-commerce operators are not permitted.
Computing the tax only on services — under Section 10(2A) the 6% is on the entire turnover (goods + services) in the State.
Bare-Act text Section 10(2A) · CGST Act, 2017 · click to expand
Section 10(2A): Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-sections (3) and (4) of section 9, 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 tax payable by him under sub-section (1) of section 9, an amount of 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, if he is not — (a) engaged in making any supply of goods or services which are not leviable to tax under this Act; (b) engaged in making any inter-State outward supplies of goods or services; (c) engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52; (d) a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council; and (e) a casual taxable person or a non-resident taxable person: Provided that where more than one registered person are having the same Permanent Account Number, the registered person shall not be eligible to opt for the scheme under this sub-section unless all such registered persons opt to pay tax under this sub-section.