GST
Inter-State sales are not allowed under composition
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Facts
A composition taxpayer cannot make inter-State outward supplies of goods or services. One inter-State sale breaks the condition. Inter-State purchases are allowed.
Provisions and law
- Sec 10(2), CGST Act 2017Lists who cannot opt, such as inter-State outward suppliers and notified manufacturers; all registrations on the same PAN must opt together
- Sec 10(5), CGST Act 2017Wrongly paying under composition attracts tax, interest and penalty
Analysis
Example: a Jaipur trader in composition ships Rs 30,000 of goods to a buyer in Delhi. He has broken the condition and becomes liable to normal tax with penalty under Sec 10(5). If you want out-of-State customers, move to the regular scheme from the start of a year, or sell only within your State. Buying stock from other States is fine.
Conclusion
- Check every order's delivery State before accepting
- Refuse or route inter-State orders through the regular scheme
- If an inter-State sale has happened, take advice and file CMP-04
- Plan a move to the regular scheme if out-of-State demand is growing
A Savvy can do this for you
Opting into composition, CMP-02
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