My neighbour owns a general stores(provision stores kirana stores) shop and doesn't maintain any sales record .He only maintains purchase bills.
So what he does is he adds 10/8% margin on purchase value and compute rate wise sales and accordingly pay GST
As if purchases made during a month are sold during that month itself i.e. GST calculations are made under an assumption(due to lack of records) of zero inventory at the end of the day.
My question is NOW he wants to opt for composition scheme and as per the act he has to reverse ITC taken on inputs held in stock on the day prior to switching to composition scheme.
But per our GST calculations all sales are made out of current stock i.e. one which is acquired on or after 1st April 2020. So he should not be liable for ITC reversal
Please help
Kirana Store Owner Debates Input Tax Credit Reversal Before Switching to GST Composition Scheme; Section 18(4) Discussed A discussion on a forum revolves around a kirana store owner intending to switch from the regular GST scheme to the Composition Scheme. The main issue is whether the owner needs to reverse the Input Tax Credit (ITC) on stock held as of March 31, 2020. A participant explains that under Section 18(4) of the CGST Act, ITC must be reversed on stock held before switching. The store owner argues that all sales are made from current stock, suggesting no reversal is needed. Another participant emphasizes the importance of maintaining proper records and suggests disposing of all stock by March 31 to avoid complications. The discussion also covers the eligibility for the Composition Scheme and the tax implications on exempt supplies. (AI Summary)
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