Skip to content

CMA Intermediate · Direct and Indirect Taxation · Composition Levy

Under the CGST Rules, 2017, a registered person paying tax under the composition levy must mention certain words at the top of the bill of supply he issues. Which wording is prescribed?

The prescribed words are "composition taxable person, not eligible to collect tax on supplies", written at the top of the bill of supply. A composition person issues a bill of supply, not a tax invoice, and cannot collect tax from customers.

  1. A"Composition taxable person, not eligible to collect tax on supplies"Correct
  2. B"Taxable person under composition, tax invoice"
  3. C"Composition dealer, tax collected as applicable"
  4. D"Small taxpayer, eligible to collect tax on supplies"

Explanation

The rules require a composition person to mention the words "composition taxable person, not eligible to collect tax on supplies" at the top of the bill of supply. He cannot issue a tax invoice or collect tax from the recipient. The other wordings are not prescribed and some wrongly suggest tax can be collected.

Did you get it right without looking?

One question tells you little. A timed set on Composition Levy shows your real accuracy, how long you take and where you lose marks.

Practise Composition LevyFree diagnostic mock

More Composition Levy questions