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Question relating to composition scheme.

anoop bhatia (CHARTERED ACCOUNTANT) (144 Points)

30 June 2017

I have a question in relation of composition scheme being going to opt by traders. A Trader having a stock of finished goods worth Rs 800000.00 and no ITC in his hand and turnover going to be less than 70 lakh during the FY 17-18 can opt for composition scheme and no ITC . If yes, than he had to pay tax before opting for composition scheme , I.e. whether he has to pay tax at GST rate on his stock of Rs 800000.00 before allowing composition scheme. Or he can simply will be allowed for composition scheme without any payment of tax on stock which he make clears on payment of gst @ 1% as per composition rate.

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3 Replies

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

1) If you have purchased goods from unregistered supplier and such goods are in stock as at 30/06/2017 ,then you have to pay tax under reverse charge at the rate applicable to that goods

2) No stock of interstate puchase as at 30/06/2017.

3) Reverse input tax credit taken on the stock as at 30/06/2017.

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anoop bhatia (CHARTERED ACCOUNTANT) (144 Points)
Replied 30 June 2017

Stock was purchased form local dealer on which he charged VAT of Rs 32000.00 on stock value of Rs 800000.00.
Vat Inpur of Rs 32000.00 was adjusted in payment of vat payable of other sales. No ITC is available in Traders hand but stock is available worth Rs 800000.00.

As per your reply we have to pay tax of input credit Rs 32000.00 under RCM before opting for composition scheme.
Pls reply.