Can a medical shop supplying MRP printed medicines be registered under composition scheme. If yes, a) can it collect MRP from customers? OR b) whether it should collect the value after excluding GST from MRP from customers?

Can a medical shop supplying MRP printed medicines be registered under composition scheme. If yes, a) can it collect MRP from customers? OR b) whether it should collect the value after excluding GST from MRP from customers?

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I will first answer your queries in short and then detailed.

  1. Yes it is eligible to be registered in composition scheme provided it follows few rules
    1. That his turnover is below the threshold limit of the respective state at the respective time of registration.
    2. There are No Sales outside the state by the medical store.
  2. Yes, It can collect MRP from customers.
  3. No, It should not collect the amount excluding GST.

Detailed Answer

  1. The composition scheme in simple words defines that you can sell the goods at the MRP or your desired price but you cannot collect GST separately. Now, What is cannot collect GST from customers? In any trade, you collect the basic amount plus the GST amount. In composition, you collect both but you don’t mention them separately. You can collect the portion of the goods but you cannot show them in the invoice.
    1. You are not allowed to show GST in an invoice
    2. You cannot issue a Tax invoice, You can issue a Bill of Supply.
    3. Your Customer cannot claim GST input on the invoice you give.
    4. You have to pay tax on a nominal amount of 1% as Tax on your turnover irrespective of GST rate of 18% or 28% or 12% or 5% of the goods, you will be paying flat 1% of GST on it.
    5. For Eg. suppose you bought Goods worth 1000 from your Dealer and he charged Rs. 180 on it as GST, your total cost is 1180. the MRP for that good is 1400 and you will sell it on MRP 1400 and pay 1% tax i.e. Rs. 14 on it. You will not Get the 180 rs. input and Rs. 14 output has to be paid as Challan by you.
  2. Thus you can collect MRP from your customer and will issue a bill of supply with MRP in it.
  3. You cannot issue them any invoice mentioning GST Seperatly.

Hope this answers your query.

Disclaimer:-
Do take advise of a professional consultant before taking any big financial step. There could be errors in this blog. We are not liable for any harm to you if any info mentioned here is used. This info is not meant to be used as legal opinion. We would love your feed back and advises/errors related to this blog. Please do contact us at [email protected] Thank You for your kind support.

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