Composition scheme & interstate purchased stock
This query is : Open
06 July 2017
One of my client is engaged in textile trading business which was earlier exempt. He was not registered under he previous laws but as now he is liable to register himself under GST as his t/o exceeds 20 lacs & he wants to opt for Composition scheme but the issue is all the purchases made earlier were interstate. As on 30.06.2017 stock held by him is out of that interstate purchases only, on which no tax was ever levied.Can he opt for composition scheme as sales are within state only? if yes, then can he register himself under GST now.
One of my client is engaged in textile trading business which was earlier exempt. He was not registered under he previous laws but as now he is liable to register himself under GST as his t/o exceeds 20 lacs & he wants to opt for Composition scheme but the issue is all the purchases made earlier were interstate. As on 30.06.2017 stock held by him is out of that interstate purchases only, on which no tax was ever levied.Can he opt for composition scheme as sales are within state only? if yes, then can he register himself under GST now.
06 July 2017
if henceforth, he is sure of BUYING as well as SELLING within the state, then only he can opt for composition. (In textile, it is bit difficult)
07 July 2017
But under composition scheme there is no bar on interstate purchase .Restriction is only on interstate outward supplies. Please correct, if i am wrong.
07 July 2017
FAQ on GST site says as follows. Please go through the same
Q11. Can a dealer involved in interstate supplies opt for Composition Scheme?
Ans. No, Composition Scheme is available only for intra-state supplies. If a dealer is involved in inter-State supplies, then he cannot opt for the scheme.
Please mind the new terminology of GST....... they use the word supply...this includes both inward as well as outward..... (Your view please)
Q11. Can a dealer involved in interstate supplies opt for Composition Scheme?
Ans. No, Composition Scheme is available only for intra-state supplies. If a dealer is involved in inter-State supplies, then he cannot opt for the scheme.
Please mind the new terminology of GST....... they use the word supply...this includes both inward as well as outward..... (Your view please)
08 July 2017
Sir,
Subject to turnover limits prescribed a Registered person may opt to pay under composition scheme if:
"He is not engaged in making any inter-State outward supplies of goods;"
https://gst.taxmann.com/topstories/105010000000014527/all-about-composition-scheme-for-small-dealers-under-gst-regime-sec-10-composition-rules-1-to-5.aspx
So what if the stock as on 30.06.2017 is out of inter state purchased stock, can he opt for Composition scheme??
Subject to turnover limits prescribed a Registered person may opt to pay under composition scheme if:
"He is not engaged in making any inter-State outward supplies of goods;"
https://gst.taxmann.com/topstories/105010000000014527/all-about-composition-scheme-for-small-dealers-under-gst-regime-sec-10-composition-rules-1-to-5.aspx
So what if the stock as on 30.06.2017 is out of inter state purchased stock, can he opt for Composition scheme??
08 July 2017
yes, he can very well opt for composition.
08 July 2017
But how as one of the conditions (i.e. point no 6) for opting for composition scheme is that :
5. In case of migration of existing registration into GST- the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State- this will not be applicable to my client as this is case of new registration
6 The goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9 i.e. under Reverse Charge- is it applicable to us as previously there was no tax on textiles industry so supplier could be unregistered??
https://gst.taxmann.com/topstories/105010000000014527/all-about-composition-scheme-for-small-dealers-under-gst-regime-sec-10-composition-rules-1-to-5.aspx
5. In case of migration of existing registration into GST- the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State- this will not be applicable to my client as this is case of new registration
6 The goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under sub-section (4) of section 9 i.e. under Reverse Charge- is it applicable to us as previously there was no tax on textiles industry so supplier could be unregistered??
https://gst.taxmann.com/topstories/105010000000014527/all-about-composition-scheme-for-small-dealers-under-gst-regime-sec-10-composition-rules-1-to-5.aspx
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