Composition Dealers under GST cannot issue Tax Invoice
Everyone knows that at the 32nd GST Council meeting, it was decided to introduce the all-new GST Composition Scheme for services & mixed supplies, from 1st April 2019. This new composition scheme is for the suppliers having GST registration with an annual turnover up to â‚¹50 lacs. This will involve a low GST rate of 6%.
The Central Board of Indirect Taxes and Customs (CBIC) has clarified that all those who opt for GST registration under this Composition scheme shall issue, a bill of supply rather than GST invoice.
#1. What is the new GST Composition Scheme?
The new composition scheme, which was recommended at the 32nd GST Council meeting, is for the suppliers of services & mixed supplies. Under this scheme-
- The threshold for GST Registration would be kept at â‚¹50 lacs.
- The GST rate shall be 6%, without the availability of Input Credit.
- Furthermore, the taxpayers having GST registration under this scheme would require only an annual GST return filing procedure in FORM GSTR-9A. They would not have to file quarterly return GSTR-4.
- This new composition scheme shall, however, be applicable with effect from 1st April 2019.
#2. What has CBIC notified for the composition taxpayers?
The CBIC had issued Removal of Difficulty Order on 8th March 2019.
- Under this, it has clarified that all persons who have GST registration under the composition scheme shall now issue Bill of Supply instead of a GST Invoice.
- This is in accordance with Section 31(3)(c) of the CGST Act 2017. This section prescribes issuance of a bill of supply instead of tax invoice by composition dealers.
- Henceforth, all the composition dealers shall now issue a bill of supply rather than a GST invoice.
#3. Why the composition taxpayers cannot raise GST invoice?
Here’s why the government has restricted composition taxpayers from raising GST invoice:
- Composition taxpayer cannot charge tax on its invoice to the customer.
- Composition taxpayer has to show an amount inclusive of taxes within the Invoice.
- Composition taxpayer cannot pass on an input tax credit to their buyers.
- Apart from that, the composition dealers are not allowed to claim the Input Tax Credit.
In order to comply above, the composition dealers cannot raise a GST invoice. However, can raise Bill of supply or normal invoice to the customers.
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