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Barter or exchange in gst

Nilkanth Muley (Software Developer) (81 Points)

24 May 2017

Question ?

1. Barter and Exchange B2B but One Dealer is Normal GST Registered and 2nd is Non- Registerd or Composition Dealer. is this transaction allowed?, If Yes then What will be the procedure without Reverse charge Rule.

Currently Medical/FMCG Wholesalers Adjust Goods Return in Next Sale Bill as Replacements/Exchange on Sold Goods.

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1 Replies

CA PRATIK DHRUVE (CHARTERED ACCOUNTANT) (634 Points)
Replied 26 May 2017

1) barter or exchange are to be considered at two separate transactions. one would be sale and other would be buy. For sale, you would have to charge gst whether the recipient be registered or unregistered. For buys, you would be the recipient and if supplier is registered, he would charge gst in bill and if supplier is not registered, he would not charge gst and you would have to pay gst on the same under reverse charge mechanism as per section 9(4). However, this would be subject to gst only if the buys are made from someone who has supplied goods to you in the course of his business, otherwise supply would be outside the scope of gst.

2) Regarding returns, each and every return can be adjusted showing debit notes in the same month or in forthcoming months. Also, the tax liability would surely be reduced in case of returns, if the goods are returned within 6 months from the sale date, just as in the case of present scenario of VAT in most of the states.

Note 1: Input tax credit for taxes paid on buys under reverse charge i.e. Section 9(4) will be available.

Note 2: Input tax credit for taxes paid on inputs received from any composite supplier will not be available.