🚫 Can a Composition Dealer Purchase Goods from Outside the State?

If you're a small business registered under the GST Composition Scheme, you enjoy the benefit of reduced compliance and lower tax rates. But many business owners often ask one important question:

🔍 What is the GST Composition Scheme?

The Composition Scheme is designed for small taxpayers to reduce compliance. Businesses pay tax at a fixed rate on turnover without needing detailed records and monthly filings.

✅ Who Can Opt for It?

• Turnover up to ₹1.5 crore (₹75 lakh for some states)
• Only intra-state sale of goods
• Limited service supply (up to ₹5 lakh or 10%)
• No inter-state trade or e-commerce

❗ Why Inter-State Purchase is Not Allowed

As per Section 10(2)(c) of the CGST Act, 2017:

A person shall not be eligible to opt for the composition scheme if they are “engaged in making any inter-state outward supplies of goods or services.”

This implies that both inter-state sales and purchases of goods are not allowed.

⚠️ Consequences of Violation

• Ineligibility for the scheme
• Converted to regular taxpayer
• Interest & penalty for default
• Need to revise past returns

✔️ What is Allowed for Composition Dealers?

Activity	Allowed?
Intra-state purchase of goods	✅ Yes
Intra-state sale of goods	✅ Yes
Limited service supply (₹5 lakh or 10%)	✅ Yes
Inter-state sale or purchase of goods	❌ No
Import/export of goods	❌ No
Sale via e-commerce operators	❌ No

📈 Want to Buy from Another State?

You must opt out of the Composition Scheme and become a Regular GST taxpayer. This allows:

• Inter-state trading
• Input Tax Credit (ITC) benefit
• Access to online marketplaces and vendors