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purchase from urd. dealer by jewellery showrooms

30 June 2017

one of my clients is a jewellery trader for which he currently pays vat @ 1% he wants to opt for composition scheme under GST act. he wants to know if he purchases goods from unregistered dealer can he avail the credit paid on such purchase?
i) if he is a manufacturer as well
ii) if he is only a trader

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4 Replies

Abhishek (studying) (115 Points)
Replied 30 June 2017

if he opts for composition scheme under gst then he cannot avail any input

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Vipul Maheshwari (Goods and Services Tax Consultant) (208 Points)
Replied 30 June 2017

IF HE IS A MANUFACTURE/TRADER

Composition scheme section 10 of CGST Act,2017

1) A person can go for composition scheme provided no stock of interstate purchase as on 30 june 2017.

2) Regarding purchases from unregistered dealers ,composition supplier has to pay tax under reverse charge (payment exceeds 5000/- per day )..in your case jeweller has to pay GST at the rate applicale to that product .(not composition rate)

3) Composition supplier cannot take input tax credit of purchases made by him including purchases on which he liable to pay tax under reverse charge.

4) provisions are same for all persons

5) On supplies made by composition dealer he has to pay tax at the rate of 1% for traders and 2 % for manufacture on turnover in state

Abhay mishra (139 Points)
Replied 30 June 2017

thank u sir

Vipul Maheshwari (Goods and Services Tax Consultant) (208 Points)
Replied 30 June 2017

1) Composition supplier cannot collect tax from customer

2) My opinion is that dont go for composition scheme in case of jewellery

because i have done tax analysis in respect of jewellery business , tax liability will be more under composition scheme as compared to normal supplier ,which is at the rate 3%

3) Dont go for composition scheme and opt as a normal registered supplier.

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