[amp_mcq option1=”Yes” option2=”No” option3=”Input tax credit on inward supply of goods only can be claimed” option4=”Input tax credit on inward supply of services only can be claimed” correct=”option2″]
The correct answer is: B. No
A registered person under Composition Scheme cannot claim input tax credit.
The Composition Scheme is a simplified tax regime for small taxpayers. Under this scheme, taxpayers are allowed to pay a fixed percentage of their turnover as tax, instead of paying tax on the actual value of their supplies. In return, they are not allowed to claim input tax credit on the goods and services they purchase.
The rationale for this is that small taxpayers are not likely to have significant input tax credits, and the administrative costs of allowing them to claim input tax credits would outweigh the benefits.
There are a few exceptions to this rule. For example, a registered person under Composition Scheme can claim input tax credit on goods and services used for making exempt supplies. They can also claim input tax credit on goods and services used for making exports.
However, in general, a registered person under Composition Scheme cannot claim input tax credit.