When a taxpayer is shifting from a normal scheme to composition scheme, the taxpayer has to pay an amount which shall be equal to the credit of input tax in respect to those inputs which are held as stock on the immediately preceding date from the date of such switch over.
19 June 2017
It means u were eligible for input because of payment of tax on outward sale.......................if now in composition scheme u r paying tax at lower rate .........hence government wants to collect the tax on stock held before composition scheme, because it they not collect such amount then it is loss to government because u already taken input tax credit on stock and now by converting the scheme u r not paying tax which should be paid.
This means we have to pay Input Tax on Closing stock held on 30.06.2017 upfront and there after transfer to composition scheme and pay GST Composition rate on same stock again.
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