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CA Intermediate · Taxation · Charge of GST

Rohan Foods Ltd., a registered manufacturer in Indore, opted for the composition scheme under section 10 for goods and has aggregate turnover of ₹90 lakh in the previous year. Which statement is correct about the charge of tax for such a person?

A composition dealer pays tax at a prescribed percentage of turnover, cannot collect tax from recipients and cannot claim input tax credit. It issues a bill of supply and is barred from making inter-State outward supplies of goods, so the option reflecting these conditions is correct.

  1. AHe can collect tax from customers separately and claim input tax credit
  2. BHe pays tax at the prescribed percentage of turnover, cannot collect tax from recipients and cannot take input tax creditCorrect
  3. CHe pays tax at normal rates but files returns less often
  4. DHe may make inter-State supplies of goods under the composition scheme

Explanation

A composition taxpayer pays tax at a specified percentage of turnover in lieu of the normal tax, cannot collect tax from customers (issues a bill of supply), and is not eligible for ITC. Option A is wrong on both collection and ITC. Option D is wrong because inter-State outward supplies of goods are not permitted under composition.

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