whether registered normal tax payer under gst will have to pay tax under RCM if he purchase from a dealer registered under composition scheme.(if yes) will normal tax payer get ITC of tax paid under RCM.
Ishan Ali (10 Points)
03 August 2017whether registered normal tax payer under gst will have to pay tax under RCM if he purchase from a dealer registered under composition scheme.(if yes) will normal tax payer get ITC of tax paid under RCM.
Geetha Varadarajan
(Ministry of finance)
(180 Points)
Replied 03 August 2017
if you are purchasing from a registered person who has opted for payment of gst on Compostion scheme under section 10 of the CGST Act 2017, you need to have to pay tax on RCM . the composition dealer is not entitled to recover the tax from the receiver of the supply. He cannot issue a tax invoice. he has to pay tax out of his proits. Any way he will include this cost in his selling priuce and issue an invlice for the transaction value whihc may also include the tax element. However, since you are not paying the tax on such supplies you may not be able to take input tax credit in respect of such supplies.
Deena.Vanan
(Grad. CWA, ACA, CS(F))
(120 Points)
Replied 03 August 2017
There is no necessity for a registered person to pay tax on his purchases from dealer who is registered under composition levy.
Only on purchases from unregistered dealer you have to pay tax under reverse charege.
Gouraw Chopda
(2 Points)
Replied 05 September 2017
i am reguler dealer, How can i bill of product whitch purchased from composition dealer???
bhavisha
(accountant)
(103 Points)
Replied 07 September 2017
i have also this query? should i make invoice and claim for RMC?
Geetha Varadarajan
(Ministry of finance)
(180 Points)
Replied 07 September 2017
the compositon dealer is not expected to levy and collect GST. so if you purchasefrom a composition dealer you should nt pay GST to him. you should pay only the basic price and no credit is available as no tax is paid. so no questioin of any RCM. please avoid future purchases from composition dealers.
CA Ashok Prasad
(Practitioner)
(133 Points)
Replied 03 October 2017
Deal all in above discussion chain,
I also hold the view that legally there is no need to pay tax under RCM on supplies received from composition dealers as on date the GST Acts stand. But it is also true no such exemption has been extended to the business entities (BE) except when underlying supply is exempt i.e. all the taxable supply received by BE has to suffer GST.
When BE procures from composition dealer whose supply is taxable should also suffer taxes. The GST levy holds true. It is only in case of section 9(4), this found to be not covered i.e recipient has not be brought under ambit of deemed suppliers.
Hence, I expect an amendment sooner than later with retrospective effect. Assessees will have to pay the taxes.
This also finds more weightage in case where assessees are under duty drawback scheme and procures from composition dealers.........here those procurers will be in advantage position. There is also a theory that tax cost of composition dealers would be factored in value of supply.........but I haven't seen a good argument where such dealers are procuring from other composition dealers only.
Fingers crossed till some genuine justificatio or amendment moves in.
Regards,
Ashok
CAclubindia
