GST: Who can opt for the composition scheme?

Our client had purchased goods from us before July 1, 2017. They have now returned those goods. Will there be any GST (goods and services tax) applicable on the returned goods? 

GST law contains specific transitional provisions regarding goods sold under the pre-GST regime which are returned by the recipient on or after July 1, 2017. If your client is not registered under the GST law, you should be eligible to claim refund of the taxes/duties paid under the pre-GST regime.

However, the refund is permissible only if the goods were sold prior to six months from July 1, 2017, and are also returned within six months after July 1, 2017. 

If your client is registered under the GST law, goods returned by it after July 1, 2017, should be deemed a separate supply transaction. In such a case, your client should be required to issue a tax invoice and charge the applicable GST.

In the case of an input service distributor (ISD), do they need to a file separate statement of outward supplies and inward supplies with their return? 

The ISD mechanism has been prescribed under GST law only with the objective of distribution of input tax pertaining to common services by the office of a supplier, which receives tax invoices for such services. A person registered as an ISD is only required to file one return per month in the prescribed GSTR-6 form. Such a return contains details of input tax credit received and distributed. A person registered as an ISD is not required to file a separate statement for outward and inward supplies in addition to Form GSTR-6. The supplier should be required to file such details for outward and inward supplies against the GST registration obtained as a supplier of goods/services.

Who can opt for the composition scheme?  Is liability to pay taxes under the reverse charge mechanism covered under it? 

GST law provides an option to a supplier of goods with annual aggregate turnover not exceeding Rs 75 lakh to opt for payment under the scheme.  A similar option has been provided to a person engaged in supply of food/beverages (other than alcohol). However, this option is not available for other service providers. It is also not available if the supplier is engaged in undertaking interstate supplies. 

GST payable under the reverse charge mechanism is not covered under the composition scheme. If a person registered under the  scheme procures any goods/services in respect of which GST is payable under the mechanism, the person should be required to pay GST and not according to rates prescribed under the composition scheme. 

In the past, we have been paying tax on GTA under reverse charge. However, our vendor recently has started charging GST at 12 per cent. Could you confirm if the GTA has an option to charge GST on the invoice?

At the time of introduction of the GST law, GTA services were liable to tax under the reverse charge mechanism at five per cent, with the condition the service provider (the GTA) should not claim input tax credit relating to goods/services used in provision of service.

However, recently, an option has been provided to a GTA service provider to pay GST at 12 per cent on a forward charge basis. If the option is taken and the GST is deposited by the GTA service provider, the latter should be eligible to claim input tax credit on the eligible procurements.   

Based on your query, it appears that to avail of the input tax credit of goods/services, your service provider has now opted to charge GST at 12 per cent.

The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in