GST change effect on composition GST payers

[Pragya]

I run a pharmacy, and I pay the GST under the composition scheme .

From 22nd sept I have to sell goods on the lesser rate . What will happen to the existing stock. Will I suffer loss on sell of the previously purchased goods, as I will not get the benefit of ITC. Please answer my query.

Thanks

[Sadanand Bulbule]

As you are registered under the Composition Scheme, you do not get Input Tax Credit (ITC) on your purchases in any case. Hence, the change in rate from 22nd September will only affect the tax you pay on your outward supplies (sales).

From 22nd September onwards, you have to discharge GST at the new reduced rate on all sales, including goods purchased earlier. 

The stock lying with you will simply be sold under the new rate.

There will be no additional liability or ITC reversal, since ITC benefit was never available in the composition scheme.

[Shilpi Jain]

If you are a composition tax payer then 1% GST as you are a trader. There is no change in rate of tax for you.

[Ganeshan Kalyani]

I agree with the view of the authors.

AI Summary

Composition scheme treatment: reduced GST rate applies to all sales including existing stock and no ITC reversal. A composition-registered pharmacy that cannot claim Input Tax Credit must charge the prevailing reduced GST rate on all sales from the effective date, including existing stock; no ITC reversal or additional liability arises because ITC was never available under the composition scheme.