What might be the reason behind blocking the credit paid on composite supplies.
Why should it be disallowed?
Composite dealers are not allowed to collect tax, i.e. a person who purchases from a composite dealer should not pay any taxes to him. Question to be re-worded.
If you meant why cannot a composite dealer avail credit, the reason is because he is allowed a concessional rate of tax, and is applicable only for small dealers with limited turnover and transactions.
If you want to enable ITC claim, suggest to register as a regular tax payer and follow compliances.
Hope this helps.
CAclubindia
