TaxTMI 
TaxTMI 
respected experts
can a composition dealer purchase from unregistered dealer and is rcm applicable for the same or not applicable
purchases from urd
26 Apr 2025 
3 Replies 
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Reverse charge mechanism not generally applicable to purchases from unregistered suppliers; composition dealers may buy but can't claim ITC.
Composition taxpayers may purchase from unregistered suppliers; purchases are not barred by the composition scheme. Reverse charge on procurements from unregistered persons is generally not applicable except for specific procurements notified by the government. Composition dealers cannot claim input tax credit, so any RCM liability (where notified) cannot be offset as ITC. A divergent reply notes RCM tax on such procurements may be required to be discharged in cash and not used to set off output tax. (AI Summary)
Composition taxpayers may purchase from unregistered suppliers; purchases are not barred by the composition scheme. Reverse charge on procurements from unregistered persons is generally not applicable except for specific procurements notified by the government. Composition dealers cannot claim input tax credit, so any RCM liability (where notified) cannot be offset as ITC. A divergent reply notes RCM tax on such procurements may be required to be discharged in cash and not used to set off output tax. (AI Summary)