How to show purchase from composition dealer

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 April 2018 Sir I am a composition dealer and I have purchased some goods from composition dealer. Kindly guide in which schedule I can show purchase from composition dealer. In schedule 4a&b rate not available for composition.

Expert : Anonymous

Expert : Anonymous (Expert)

16 April 2018 No need to show it.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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28 July 2024 As a composition dealer under the Goods and Services Tax (GST) regime, it is important to correctly handle the purchases you make from other composition dealers. Here's a step-by-step guide on how to show purchases from composition dealers:

### 1. **Understanding the Composition Scheme**

- **Composition Scheme Basics:** Under the GST Composition Scheme, businesses with a turnover below a specified limit (₹1.5 crores for most states) pay tax at a reduced rate and cannot claim Input Tax Credit (ITC). Therefore, purchases from composition dealers cannot be claimed for ITC.

### 2. **Reporting Purchases from Composition Dealers**

**A. Reporting in GST Returns**

1. **GST Return Types:**
- **GSTR-1 (Sales):** Report your sales and outward supplies here.
- **GSTR-3B (Monthly Summary):** Report your consolidated details of outward supplies, inward supplies, and taxes paid here.

2. **Purchase from Composition Dealers:**
- Since you cannot claim ITC on purchases from composition dealers, you need to report these purchases correctly.

**B. Reporting in GSTR-3B**

1. **Schedule 4A (Inward Supplies):**
- **Schedule 4A:** This schedule is used for reporting input tax credit on inward supplies. However, since you are a composition dealer, you do not claim ITC on purchases from other composition dealers.

2. **How to Report:**
- **Include Details in Table 4B:** Even though you cannot claim ITC, you still need to record these purchases for completeness. In GSTR-3B, you typically enter such details in Table 4B under the appropriate sections for non-ITC purchases.
- **Tax Paid on Purchase:** If you are reporting these purchases, make sure you record the details of taxes paid as non-claimable.

**C. Reporting in GSTR-1**

1. **Schedule 4A & 4B:**
- **Not Directly Applicable:** Since purchases from composition dealers do not attract ITC, you do not report them in GSTR-1 under Schedule 4A or 4B directly.

2. **Record Keeping:**
- **Maintain Records:** Maintain proper records of such purchases in your books of accounts. This is necessary for any future reference or audits, even if not reported directly in the GST returns.

### 3. **Additional Considerations**

**A. Compliance:**
- **Ensure Compliance:** Ensure you comply with all other GST requirements and keep accurate records of all transactions, including purchases from composition dealers.

**B. Documentation:**
- **Maintain Documentation:** Keep all invoices and documents related to purchases from composition dealers for record-keeping and audit purposes.

**C. Consult a GST Professional:**
- **Seek Expert Advice:** If you have complex transactions or specific concerns, consulting a GST practitioner or tax advisor is advisable to ensure correct compliance.

By following these guidelines, you will ensure that your purchases from composition dealers are correctly accounted for and compliant with GST regulations, even though ITC cannot be claimed on such purchases.

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