Can composition dealer provide exempted work contract service or not.

Reply-Yes, there is no restriction, composition dealers can provide exempt services however, a taxpayer registered under composition scheme cannot supply goods on which GST is not leviable i.e. liquor, petrol etc. 

As per CGST (Amendment) Act, 2018 (w.e.f. 01.04.2019) composition dealer (supplier of goods) may supply services of value not exceeding ten percent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher. Rate of tax (1%) will be applicable on sale of goods as well as on supply of services. Your client can opt for composition scheme.

However, if the value of supply of service will be more than 10% of turnover and the value of such service also exceeding Rs. 5 lakhs, the taxpayer would not be able to continue his registration as a composition dealer under section 10(1) of CGST Act.

If the composition scheme taxpayer is a manufacturer of goods then rate of tax will be 1% on total outward supplies (whether it is taxable or Exempted) as per Rule 7 of CGST Rules.

However, if such person is only a trader of goods, then GST will be 1% on only taxable supply and not Exempted supply.

A person who is not eligible to pay tax under sub-section (1) of section 10 of the CGST Act can apply for a composition scheme in terms of notification no. 02/2019 (central tax rate) dated 07.03.2019. The registered person opting to pay central tax at the rate of three percent under this notification shall be liable to pay central tax at the rate of six percent on all outward supplies