COMPOSITION SCHEME

[Shreyansh Agrawal]

DEAR EXPERTS,

MY CLIENT IS A REGULAR DEALER UNDER VAT. NOW HE OPTED COMPOSITION SCHEME UNDER GST BUT STOCK HELD ON APPOINTED DAY INCLUDE TAXFREE, TAXABLE AND EVEN HE HAS STOCK WHICH ARE PURCHASED FROM UNREGISTERED DEALER. IN TRANSITIONAL PROVISIONS OR ANY OTHER SEC OF GST HAS NOT MENTIONED THAT YOU HAVE PAY TAX FOR INPUT HELD IN STOCK FOR WHICH CREDIT IS TAKEN OR FIRSTLY, IT IS TAXFREE UNDER EARLIER LAW AND NOW IT BECAME TAXABLE UNDER GST OR YOU HAVE TO PAY TAX ON REVERSE CHARGES BASIS PURCHASED FROM UNREGISTERED DEALER UNDER EARLIER LAW . WHETHER MY INTERPRETATION TO THE SEC IS CORRECT???

AI Summary

GST Composition Scheme: No Input Tax Credit on Transition Stock; No Reverse Charge on Pre-July 2017 Purchases. A client, previously a regular VAT dealer, opted for the GST composition scheme and is concerned about the tax implications for stock held on the transition date, which includes tax-free, taxable, and goods from unregistered dealers. Experts clarified that under Section 10 of the CGST Act, 2017, the client cannot claim input tax credit on existing stock when opting for the composition scheme. The client must pay GST on the stock to comply with the scheme. Additionally, there is no requirement to pay reverse charge tax on goods purchased from unregistered dealers before July 1, 2017.