A registered buyer purchases goods worth ₹1,00,000 from a trader paying tax under the composition levy at 1% of turnover, and receives a bill of supply. How much input tax credit can the buyer take…
Question and options
A registered buyer purchases goods worth ₹1,00,000 from a trader paying tax under the composition levy at 1% of turnover, and receives a bill of supply. How much input tax credit can the buyer take on this purchase?
₹18,000
₹1,000
Nil
₹500
Answer and explanation
Correct answer: C - Nil
Section 10(4) of the CGST Act, 2017 bars a composition taxpayer from collecting tax from the recipient, and it issues a bill of supply showing no tax. The composition levy of ₹1,000 is the seller's own cost, so the buyer has no tax charged on a tax invoice to claim under section 16.
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