Term

Description

Input tax

Output tax

Input Credit

Composite Dealers

This is a tax paid on purchases

This is a tax charged on sales

The amount of Input tax that is permitted to be set off against Output tax.

Dealers with annual gross turnover not exceeding a certain threshold (threshold - decided by the respective State Governments) can opt for a composition scheme whereby they will pay tax as a small percentage of their gross turnover. However, retailers opting for this composition scheme will not be entitled to Input Credit.

The State Governments fix the periods and the procedures for the payment of the lump sum.