GST
ITC when a composition supplier charged GST
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Facts
A composition dealer cannot collect GST from customers and must issue a bill of supply. There is no ITC on purchases from a composition dealer. If he has charged GST, it is an error on his side.
Provisions and law
- Sec 10(4), CGST Act 2017A composition taxpayer cannot collect tax from the recipient and is not entitled to ITC
- Sec 16(2)(aa), CGST Act 2017ITC is allowed only if the supplier has reported the invoice in GSTR-1 and it is communicated to the buyer
Analysis
Search the supplier's GSTIN; the taxpayer type will show Composition. Since he will not report your invoice as a taxable B2B supply, it will not appear in your GSTR-2B. Example: a Rs 50,000 bill with Rs 9,000 GST from a composition dealer gives you no credit, so you would pay Rs 9,000 extra for nothing. Ask for a corrected bill of supply.
Conclusion
- Check taxpayer type on Search Taxpayer
- If Composition, do not claim ITC on the bill
- Ask the supplier to issue a correct bill of supply without GST
- Pay only the corrected amount
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