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Reverse charge input

richa more (manager) (66 Points)

22 May 2017

I want to ask if I am a composite dealer in gst and has to pay tax under reverse charge than whether input can be availed for the same and if yes then where ??? As I am composite dealer and I have to pay fixed tax on my supply of goods

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7 Replies

Gaurav Sarda (CA) (36 Points)
Replied 22 May 2017

No, input cannot be availed. As no credit would be allowed under Composition scheme

richa more (manager) (66 Points)
Replied 22 May 2017

it will be lapse ???

richa more (manager) (66 Points)
Replied 22 May 2017

Being a composition dealer, do I have to pay tax under Reverse charge mechanism? I am not allowed to take ITC for my inward supplies, so what will happen to the tax paid by me under Reverse charge mechanism?

Section 2(62) says that “input tax” does not include the tax paid under the composition levy.
Here the word used are “under” and “levy” and not “by” and “dealer/person”. Also section 10(1) state that Composition scheme does not affect the liability of the dealer to pay tax under reverse charge mechanism.

So it can be interpreted that a composition dealer may claim credit of tax paid under Reverse Charge Mechanism. Also composition dealer shall pay tax under Reverse Charge Mechanism at normal rate of tax applicable to such supply and not at the rate applicable for his category.

richa more (manager) (66 Points)
Replied 22 May 2017

rohit (none) (186 Points)
Replied 22 May 2017

Section 2(62) “input tax” in relation to a registered person, means the central tax, State tax,
integrated tax or Union territory tax charged on any supply of goods or services or
both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of
section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of
section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of
section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of
section 7 of the Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
Section 2(63) “input tax credit” means the credit of input tax;

So, ITC of tax paid under RCM is available.

CA Altamush Zafar (GST Consultant) (15907 Points)
Replied 22 May 2017

As per section 10(4) composition dealer not eligible to claim credits on input tax. Input tax includes tax paid on RCM. Therefore no credits will be available.

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Studentsca (CA Practice ) (3577 Points)
Replied 22 May 2017

It does not matter whether the dealer who is opting for Composition Levy is paying Input tax under forward charge or reverse charge, he is not eligible for any ITC.