PROVISION OF SEC 18(4) APPLY TO NON COMPOSITION DEALER

[YUWRAJ KOTHARI]

WHETHER PROVISION OF SEC 18(4) APPLY TO NON COMPOSITION DEALER UNDER VAT I.E EARLIER LAW AND OPTING TO COMPOSITION U/SEC 10 UNDER GST OR REGISTERED UNDER GST AND LATER STAGE SHIFTS TO COMPOSITION SCHEME ?

[DR.MARIAPPAN GOVINDARAJAN]

Section 18(4) is applicable to any person who has availed of input tax credit-opts to pay tax under Composition levy under section 10 on or after 01.07.2017 and if the goods or services provided by him early becomes exempted in GST regime then he shall pay the amount equal to the credit taken.

Section 18(4) is applicable to non composition dealer under earlier law opting to composition levy if the goods or services or both becomes exempted in GST regime.

AI Summary

Input tax credit reversal: composition taxpayers must repay credit when previously taxed supplies become exempt under GST law. Section 18(4) requires repayment of input tax credit where a person who has availed credit subsequently opts for the composition levy and the goods or services previously supplied become exempt under GST; such person must pay an amount equal to the credit taken. The rule applies to earlier non-composition dealers who opt into composition and to registrants who later shift to composition when exempt supplies are involved.