EXAMPLE-130

 Amit Traders, registered under GST sold goods as regular dealer and collected taxes from buyers and claimed ITC on input goods, capital goods and input services.  Amit Traders, had his aggregate turnover below 50 lakh in the preceding year and desired to opt for composition scheme under GST in the succeeding year. Thus, he filed an intimation for opting composition scheme on 1^st  April, 2018 for FY 2018-19.  On 31^st March, Amit Trader had stock of goods of Rs 900000 on which tax has been paid @18% and capital goods in stock which have been used for 5 year and 6 months.

 Determine how to deal with above situation under GST.

  Answer

Section 18(4) provides that where a registered taxable person paying tax under normal provision of GST switches to payment of tax under composition levy u/s 10, then registered taxable person shall be liable to pay an amount by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day immediately preceding the date of such switch over.

 Hence  in view of above provision, Amit Trader switched over to composition scheme from 1^st April, 2018, therefore, Mr. Amit Trader shall  pay an amount equal to  credit of input tax in respect of stock held on 31^st March, 2018 i.e. 900000*18% = Rs. 162000. No amount would liable to be reversed in respect of capital  goods in stock as as the same remained in use for more than 5 year.

He shall pay above amount by way of debit in the electronic credit or cash ledger.

  The above calculation has been done separately for CGST, SGST and IGST.