Composition Scheme U/s 10 of CGST Act – subject to double taxation

Under composition scheme dealer is required to pay tax based on Turnover including exempted Turnover of goods.

Issue :

(i) Composition dealer can not avail the credit for the goods or services procured by him leads to cascading of taxes

(ii) Additional Turnover Tax needs to be paid by composition assessee which is part of the cost of the composition supplier which is generally equivalent to the value addition for eg. if 1% is payable then value addition is charged on 10%.

(iii) Registration applied for composition but granted under normal scheme

Suggestion :

(i) It is suggested that credit available by composition assessee be passed to the recipient like under central excise law First stage dealer provisions or any other model of adhoc credit basis like 40% or 60% or any other basis as procurement by the recipient from the composition dealer affecting MSE Sector as prices of supplies made by composition dealer are high in comparison to the normal dealer.

(ii) Registration wrongly granted be rectified to composition on immediate basis.

Source- Suggestions on GST Implementation Issues by ICAI

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