Clauses (e) and (f): Composition Supplies and Non-Residents

Clauses explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Two of the shortest clauses in s.17(5). Neither is contentious, and both are worth understanding because they explain why certain purchases never produce credit no matter how the invoice looks.

Clause (e) blocks credit on goods or services or both on which tax has been paid under section 10 — the composition levy. Clause (f) blocks credit on goods or services or both received by a non-resident taxable person except on goods imported by him.

Clause (e): supplies from a composition dealer

Section 10 allows an eligible small supplier to pay tax at a flat percentage of turnover instead of the normal rate, with no credit on inputs.

Two features of the scheme make clause (e) almost self-executing:

A composition dealer cannot collect tax. Section 10(4): a taxable person paying tax under s.10 shall not collect any tax from the recipient on supplies made by him, and shall not be entitled to any credit of input tax.

A composition dealer issues a bill of supply. Section 31(3)(c) read with Rule 49 — not a tax invoice. And Rule 49 requires the bill of supply of a composition taxpayer to carry the words "composition taxable person, not eligible to collect tax on supplies".

So the recipient never receives a tax invoice, never sees a tax amount, and has nothing to claim. Clause (e) closes the theoretical gap.

Why clause (e) still matters

Cost, not credit. A business buying from a composition dealer bears the composition tax embedded in the price with no recovery. Where the same input is available from a regular supplier at a comparable price, the regular supplier is cheaper after credit — often materially so.

Procurement policy. For a business with substantial input spend, a supplier's registration status is a price factor, not a compliance detail. A quote from a composition dealer at ₹100 and a quote from a regular dealer at ₹112 (₹100 + 12 tax, fully creditable) cost the same.

Reverse charge is unaffected. Where a supply from a composition dealer attracts tax under reverse charge in the recipient's hands, the recipient pays that tax and takes credit of it under the ordinary rules. Clause (e) blocks credit of tax paid under s.10, not tax paid by the recipient under s.9(3) or s.9(4).

GSTR-9 Table 16A. The annual return requires disclosure of supplies received from composition taxpayers, which is a direct prompt to identify them in the purchase ledger. Most systems do not flag them, and the disclosure is frequently left blank.

Clause (f): non-resident taxable persons

A non-resident taxable person under s.2(77) is a person who occasionally undertakes transactions involving supply, but who has no fixed place of business or residence in India.

Clause (f) blocks credit on everything such a person receives, except goods imported by him.

The clause mirrors s.24(1), which contains the same restriction in the registration provisions. Having it in both places is belt and braces.

What the NRTP can claim: IGST paid on the import of goods, evidenced by the bill of entry.

What it cannot claim: exhibition stall rental, local logistics, local professional services, hotel accommodation, and anything else procured in India.

The rationale is administrative — a registration valid for ninety days, extendable by ninety, held by a person with no Indian presence, offers no realistic basis for post-departure verification of Indian procurements. The import is different because customs already records it.

ITC for casual and non-resident taxable persons →

What clause (f) does not cover

Casual taxable persons. A CTP has a fixed place of business elsewhere in India and is not covered by clause (f). It takes credit like any other registered person.

Foreign companies with an Indian registration as an ordinary taxpayer. A foreign entity with a fixed establishment in India registers normally, not as an NRTP, and clause (f) does not apply.

OIDAR suppliers registered under s.14 of the IGST Act. They operate under a simplified registration and file GSTR-5A; the credit question does not arise in the same way because they have no Indian procurements to speak of.

Key takeaways

• Clause (e) blocks credit on supplies on which tax was paid under s.10 — the composition levy.
• A composition dealer issues a bill of supply and cannot collect tax, so there is nothing to claim.
• Composition tax is an embedded cost — a supplier's registration status is a price factor.
• Clause (e) does not block RCM credit where the recipient itself pays the tax.
• Clause (f) blocks all credit for a non-resident taxable person except on goods imported by him.
• Casual taxable persons are not covered by clause (f).

Read next

• ITC for Casual and Non-Resident Taxable Persons
• Composition Scheme vs Regular GST: Which Is Better
• Blocked ITC Under Section 17(5)
• Bill of Supply for Exempt and Composition Dealers

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Blocked Credit under GST (November 2025).