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CA Intermediate · Taxation · Charge of GST

Ravi, a registered person in Karnataka, supplies services to a recipient in Karnataka. The services are taxable at 18% and the value of supply is Rs 1,00,000. Ravi has opted for the composition levy and is not eligible to collect tax. Which statement about Ravi's invoice for this supply is correct under the CGST Act, 2017?

A composition taxpayer cannot collect tax from the recipient and must issue a bill of supply instead of a tax invoice. He pays tax at the composition rate from his own pocket, so charging GST at 18% on the invoice is not permitted, even if the buyer asks for credit.

  1. AHe may charge CGST and SGST at 9% each in the invoice and keep the amount
  2. BHe may not collect tax from the recipient and must issue a bill of supply, even though he pays composition tax out of his own pocketCorrect
  3. CHe must charge IGST at 18% because services are involved
  4. DHe may charge GST if the recipient requests an input tax credit

Explanation

A composition dealer cannot collect tax from the recipient and issues a bill of supply, not a tax invoice. Tax is paid at the composition rate from his own funds. Charging GST would be a contravention and the recipient gets no credit.

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