GST - Composition

[Ethirajan Parthasarathy]

A Composition dealer sells goods at MRP which is inclusive of taxes. Does it mean he is collecting GST which is prohibited under GST Act.

[KASTURI SETHI]

Yes. As per definition of MRP, all kinds of taxes are subsumed in this price.

[DR.MARIAPPAN GOVINDARAJAN]

Yes. it is inclusive of GST also. As per the requirements of GST inclusive tax concept should not be adopted. All taxes are explicitly to be noted.

[Alkesh Jani]

Sir,

In this regards, The goods received by a composition dealer of certain value (Dealer Price) Plus GST and MRP is printed on the goods. As composition dealer cannot avail ITC, the value (DP) plus GST is the cost price of the composition dealer and He sells the goods at MRP and shall pay GST on this turnover. In aforesaid premises, nowhere, it can be said that GST is collected by the composition dealer.

Our experts may like to correct me if mistaken.

Thanks

[YAGAY and SUN]

In GST MRP is not recognised to pay or collect taxes.

[Himansu Sekhar]

In gst transaction value decoder the tax. Mrp is not a concept here.

[Ganeshan Kalyani]

When the composition person arrives at the sale value it includes the cost of product and incidental expenses and profit component. He is not supposed to collect tax. He is to pay tax on his turnover. However, practically businessman will collect tax on the transaction value which will be disclosed on the selling price but hidden.

AI Summary

Composition scheme restricts dealers from separately collecting GST; they must pay tax on turnover without availing input tax credit.
Composition dealers cannot claim input tax credit and must pay GST on their turnover rather than collect tax separately; MRP is an inclusive retail price and is not a statutory mechanism to permit separate GST collection under the composition regime, though market practice may embed tax within selling prices.