Site navigation

What input tax credit may a registered person claim while paying tax under the composition scheme in section 10 of the Central Goods and Services Tax Act, 2017?

Question and options

What input tax credit may a registered person claim while paying tax under the composition scheme in section 10 of the Central Goods and Services Tax Act, 2017?

  1. Credit on capital goods but not on inputs or services

  2. Credit on inputs of goods but not on input services

  3. No input tax credit on any inward supply

  4. Full credit, though tax cannot be collected from recipients

Answer and explanation

Correct answer: C - No input tax credit on any inward supply

Section 10(4) of the CGST Act, 2017 provides that a person paying tax under the composition scheme shall not collect any tax from the recipient on his supplies and shall not be entitled to any input tax credit. The bar on collecting tax does not come with a right to credit, which is the tempting reading; both restrictions apply together, to goods, capital goods and services alike.

Practice for these exams

Related exam syllabi

More solved explanations in GST - levy, supply, input tax credit, registration & returns