12 Mar 2019Posted By: Mudit Handa

Composition Dealers under GST cannot issue Tax Invoice

Everyone knows that at the 32nd GST Council meeting, it was decided to introduce the all-new GST Composition Scheme for services & mixed supplies, from 1st April 2019. This new composition scheme is for the suppliers having GST registration with an annual turnover up to ₹50 lacs. This will involve a low GST rate of 6%.   

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that all those who opt for GST registration under this Composition scheme shall issue, a bill of supply rather than GST invoice.


#1. What is the new GST Composition Scheme?

The new composition scheme, which was recommended at the 32nd GST Council meeting, is for the suppliers of services & mixed supplies. Under this scheme-

  1. The threshold for GST Registration would be kept at ₹50 lacs.
  2. The GST rate shall be 6%, without the availability of Input Credit.
  3. Furthermore, the taxpayers having GST registration under this scheme would require only an annual GST return filing procedure in FORM GSTR-9A. They would not have to file quarterly return GSTR-4.
  4. This new composition scheme shall, however, be applicable with effect from 1st April 2019.


#2. What has CBIC notified for the composition taxpayers?

The CBIC had issued Removal of Difficulty Order on 8th March 2019.

  • Under this, it has clarified that all persons who have GST registration under the composition scheme shall now issue Bill of Supply instead of a GST Invoice.
  • This is in accordance with Section 31(3)(c) of the CGST Act 2017. This section prescribes issuance of a bill of supply instead of tax invoice by composition dealers.
  • Henceforth, all the composition dealers shall now issue a bill of supply rather than a GST invoice.


#3. Why the composition taxpayers cannot raise GST invoice?

Here’s why the government has restricted composition taxpayers from raising GST invoice:

  • Composition taxpayer cannot charge tax on its invoice to the customer.
  • Composition taxpayer has to show an amount inclusive of taxes within the Invoice.
  • Composition taxpayer cannot pass on an input tax credit to their buyers.
  • Apart from that, the composition dealers are not allowed to claim the Input Tax Credit.

In order to comply above, the composition dealers cannot raise a GST invoice. However, can raise Bill of supply or normal invoice to the customers.

GST Taxpayer under Normal or Composition scheme can easily create GST Tax Invoice or Bill of Supply on InstaBill Software.


If you need any help regarding GST registration, or GST return filing procedure, feel free to contact our business advisor at 8881-069-069.

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