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CS Executive · Tax Laws and Practice · Levy and Collection of GST

A composition taxpayer under section 10 who is a trader makes outward supplies. Which statement about his position under section 10(4) is correct?

He cannot collect tax from the recipient and is not entitled to input tax credit. Section 10(4) imposes both restrictions together on a composition taxpayer, who pays tax from his own pocket at the prescribed rate on turnover instead.

  1. AHe may collect tax from the recipient but cannot claim input tax credit
  2. BHe cannot collect any tax from the recipient and is not entitled to any input tax creditCorrect
  3. CHe may claim input tax credit but cannot collect tax from the recipient
  4. DHe may collect tax from the recipient and may also claim input tax credit

Explanation

Section 10(4) states that such a person shall not collect any tax from the recipient on supplies made, nor shall he be entitled to any credit of input tax. Both restrictions apply together, so the other combinations are wrong.

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