A Composition Dealer has to pay tax under Reverse Charge Mechanism wherever applicable. The rate applicable to the supplies is the rate at which GST has to be paid. This means that rate under composition scheme should not be used for reverse charge purposes. Also, no ITC is available for tax paid under reverse charge for a composition dealer.

Tax at normal rates has to be paid on purchases from an unregistered dealer only for the months of July and August 2017. From September there is no need to pay tax on these purchases.

No, a dealer registered under composition scheme is not required to maintain detailed records as required by a normal taxpayer.

No, a Composition Dealer is not allowed to avail input tax credit of GST on purchases.

A Composition Dealer has to issue Bill of Supply. They cannot issue a tax invoice. This is because the tax has to be paid by the dealer out of pocket. A Composition Dealer is not allowed to recover the GST from the customers.

No, a Composition Dealer is not allowed to collect composition tax from the buyer.

Composition Scheme is available only for dealers doing intra-state supplies. If a dealer is involved in inter-State supplies, then they have to opt out of the scheme.

Taxpayers registered under composition scheme under VAT will be allowed to take credit of input in stock, or in semi-finished goods or in finished goods held on the day before the day of opting out of composition scheme.

Following are the conditions which must be addressed by the taxpayer to avail credit on input at the time of transition from composition scheme to the normal scheme:

a)      Inputs or goods will be used for making taxable supplies.

b)      The CENVAT Credit was eligible to be claimed in the previous regime, however, couldn’t claim it being under composition scheme.

c)       ITC is eligible for availing under GST regime.

d)      The taxpayer has bills of input tax paid on such goods.

When switching from normal scheme to composition scheme, the taxpayer shall be liable to pay an amount equal to the credit of input tax in respect of inputs held in stock on the day immediately preceding the date of such switchover. The balance of input tax credit after payment of such amount, if any lying in the credit ledger shall lapse.

Yes, this is possible. You can opt to switch between the Composition Scheme and the normal scheme based on your turnover. However, you will have to keep in mind that this will affect the way you issue invoices and file your returns.

The declaration of change can be submitted on the GST Portal.

Yes. Composition dealers cannot charge GST on their sales. So the end consumer pays less money than usual.

No. Before the beginning of every financial year, a registered taxpayer is required to provide a declaration on the GST Portal. This cannot be done anytime during the year.

When a dealer opts out of composition scheme all the normal rules are applicable from the day of opting out.