MEPL CLASSES

COURSE NAME: CS EXECUTIVE

SUBJECT NAME: TAXATION
Website- www.meplclasses.com
Mail Id:- [email protected]
Main Centre- 59, Jatindra Mohan Avenue Shobhabazar Kolkata-700005.
(Time allowed: 3 Hours) (Total marks: 100)

CS EXECUTIVE – NEW SYLLABUS

ALL QUESTIONS ARE COMPULSORY

PART I: DIRECT TAX (60 MARKS)

QUESTION 1
Ms. Pinky submits the following particulars for the year ended 31st
March, 2024:

SI. Particulars Rs.

No.
(i) Loss from let out residential building—computed 3,00,000
(ii) Arrear rent from a commercial building 40,000
received during the year (commercial
property had been sold in June, 2018)
(iii) Textile business discontinued from 31st 60,000
October 2018— Brought forward business loss
of Asst. Year 2019-20
(iv) Profit from chemical business of current year 5,50,000
(computed)
(v) Bad debt written off in the Assessment Year 1,00,000
2016-17 relating to textile business
recovered during the year consequent to
Court decree
(vi) Long-term capital gain on sale of shares (STT 90,000
paid) in recognized stock exchange on
23.05.2023
(vii) Speculation business in oil seeds— profit 3,00,000
(viii) Winning from lottery (Gross) 11,00,000
(ix) Loss from the activity of owning and 2,10,000
maintaining race horses
 SOLUTION:
Computation of total income of Ms. Pinky for the Assessment year 2024 – 2025:
Particulars Rs. Rs.
Income from house property
Loss from let out property 3,00,000
Arrear rent received 40,000
Less: Deduction U/s.24 @ 30% 12,000
28,000
Loss from house property 2,72,000
Amount of loss eligible for set off: Ceiling (2,00,000)
Amount eligible for carry forward Rs.72,000
Income from business:
Bad debt of discontinued business recovered 1,00,000
Less: Loss b r o u g h t f o r w a r d r e l a t i n g t o 60,000
discontinued business
Income from discontinued business 40,000

Profit from chemical business of current year 5,50,000

Income from Business 5,90,000
Profit from speculation business 3,00,000
Income from Business 8,90,000
Less: Loss under the head 'house property' set off 2,00,000
Income from business after set off 6,90,000
Capital gain:
Long term capital gain (STT paid) 90,000
Income from other sources
Winning from lottery-taxable @ 30% under section 115BB 11,00,000
• Loss from the activity of owning and maintaining Nil
horse
races not eligible for set off against any other income,
and
• to be carried forward and set off only against the
same source.
Total Income 18,80,000

Note:

For the losses to be carried forward, it is necessary to file Income Tax Return (ITR)
within due date of section 139(1) of Income Tax. However, unabsorbed depreciation
and Loss from House Property can be carried forward even if ITR is not filed within
due date of section 139(1) of the Income Tax Act, 1961.
 QUESTION 2

A. The business of a HUF is transacted from Australia and all the policy
decisions are taken there. Mr. E, the Karta of the HUF, who was born in Kolkata,
visits India during the P.Y. 2023-24 after 15 years. He comes to India on
1.4.2023 and leaves for Australia on 1.12.2023. Determine the residential
status of Mr. E and the HUF for A.Y. 2024-25.
(5 MARKS)

SOLUTION

During the P.Y. 2023-24, Mr. E has stayed in India for 245 days (i.e.
30+31+30+31+31+30+31+30+1 days). Therefore, he is a resident. However,
since he has come to India after 15 years, he does not satisfy the condition for
being ordinarily resident. Therefore, the residential status of Mr. E for the P.Y.
2023-24 is resident but not ordinarily resident.

Since the business of the HUF is transacted from Australia and policy decisions
are taken there, it is assumed that the control and management is in Australia
i.e., the control and management is wholly outside India. Therefore, the HUF is
a non-resident for the P.Y. 2023-24.

B. From the following particulars of income furnished by Mr. Anirudh pertaining

to the year ended 31.3.2024, compute the total income for the assessment year
2024-25, if he is:

(i) Resident and ordinary resident;

(ii) Resident but not ordinarily resident;
(iii) Non-resident

Particulars ₹
(a) Short term capital gains on sale of shares of an 15,000
Indian Company, received in Germany
(b) Dividend from a Japanese Company, received in 10,000
Japan
(c) Rent from property in London deposited in a bank in 75,000
London, later on remitted to India through approved
 banking channels
(d) Dividend from RP Ltd., an Indian Company 6,000
(e) Agricultural income from land in Gujarat 25,000

(6 MARKS)

SOLUTION

Computation of total income of Mr. Anirudh for the A.Y. 2024-25

Resident Resident Non-

Particulars & but not Resident
ordinarily ordinarily ₹
resident resident
₹ ₹

1) Short term capital gains on sale 15,000 15,000 15,000

of shares of an Indian company,
received in Germany
2) Dividend from a Japanese 10,000 - -
company, received in Japan
3) Rent from property in London 52,500 - -
deposited in a bank in London
[See Note (i) below]
4) Dividend from RP Ltd., an 6,000 6,000 6,000
Indian Company
5) Agricultural income from land in
Gujarat [See Note (ii) below] - - -
Total Income 83,500 21,000 21,000

Notes:
(i) It has been assumed that the rental income is the gross annual value of the
property. Therefore, deduction @30% under section 24, has been provided and
the net income so computed is taken into account for determining the total
income of a resident and ordinarily resident.

₹
Rent received (assumed as gross annual value) 75,000
Less: Deduction under section 24 (30% of ₹ 22,500
75,000)
Income from house property 52,500

(ii) Agricultural income is exempt under section 10(1)

QUESTION 3

A. Kundan Lal grows sugarcane and uses the same for the purpose of
manufacturing sugar in his factory. 40% of the sugarcane produce is sold for ₹
15,00,000 and the cost of cultivation of this part is ₹ 8,00,000. 60% of the
sugarcane produce is further subjected to manufacturing sugar and the Market
Value (MV) of the same was ₹ 33,00,000 and the cost of cultivation of this part
was ₹ 21,00,000.
Post incurring ₹ 3,00,000 in the manufacturing process for sugar, that the
sugarcane was subjected to, the sugar was sold for ₹ 40,00,000.

You are required to advise on his Agricultural and Business Income.

(6 MARKS)

SOLUTION

Particulars Figure in Lakhs Figure in Lakhs

Item Sugarcane Sugar
Sale 48.0 40.0
Cost of cultivation 29.0 33.0
Further Mfg. 0.0 3.0
Agricultural Income 19.0
Business Income 4.0
Notes:

a) 40% of the sugarcane produce was sold raw @ ₹ 15,00,000 and 60% of the
sugarcane produce was subjected to further manufacturing, MV was ₹
33,00,000. Therefore, for the purposes of agricultural income, the entire
produce was disposed at a consideration of ₹ 48,00,000

b) The cost of 100% produce is ₹ 800,000 and ₹ 21,00,000 for the 40% and
60% respectively, which is ₹ 29,00,000

c) For sugar, the MV of the 60% produce would be taken as the cost hence, and
therefore the cost of cultivation would be ₹ 33,00,000

B. Nitin is an employee of XYZ Ltd. He was appointed on 1st Mar 2023 at a scale
of 50000-5000-70000. He is paid DA (which forms part of retirement benefits)
@ 15% of Basic Pay and Bonus equivalent to 2 month's salary at end of FY. He
contributes 18% of his Basic + DA to a recognised provident fund, and the
contribution is matched by the employer.

He is provided rent free accommodation, hired by the employer, @ 25000 pm.

He is also provided the following benefits/ amenities:
a) Medical Treatment of his dependant spouse ₹ 40000
b) Monthly salary to housekeeper ₹ 4000
c) Telephone Allowance ₹ 1200 pm
d) Gift Voucher of ₹ 4500 on account of his marriage anniversary
e) Medical Insurance Premium for Nitin, paid by his employer ₹ 15000
f) Motor Car owned and driven by Nitin, and engine capacity within 1.6 L; used
partly for official and partly for personal purposes. Running & maintenance
expenses borne by the employer ₹ 36,600/-
g) Lunch during office hours valued at ₹ 2200/-

He was also allotted 2000 sweat equity shares in Sep 2022. The shares were
allotted @ ₹ 227 per share against the FMV of ₹ 377 per share as on the date of
exercise of the Option.

Compute the Salary Chargeable to tax.

Given that assessee has opted to shift out of section 115BAC.

 (6 MARKS)

SOLUTION

Assessee has opted to shift out of Section 115BAC

Particulars Amount ₹
Basic 6,05,000
DA 90,750
Bonus 1,10,000
Employers' Contribution to PF > 12% 41,745
Taxable Allowances
Telephone 14,400
Taxable Perquisites
Medical Reimbursement (Fully Taxable) 40,000
Housekeeper 48,000
Motor Car 15,000
Rent Free Accommodation 1,23,023
Sweat Equity 3,00,000
Gross Salary 13,87,918
Less: Standard Deduction under section 16(ia) (50,000)
Taxable Salary 13,37,918

Note:

1) Employer's Contribution to Provident Fund in excess of 12% is chargeable to

Income Tax.

2) Rent Free Accommodation is valued as under:

a. Since the accommodation is hired, the actual hire charges subject to a cap
of 15% of "salary" is considered;
b. "Salary" for this purpose is Basic + DA + Bonus + all Taxable Allowances
= ₹ 8,20,150.

3) Medical Treatment is chargeable to Tax, as no more tax free perquisite.

4) Since the value of the gift voucher is below ₹ 5000, it is not taxable as
perquisite.
5) Lunch during office hours is also not taxable as perquisite assuming cost of
meal upto ₹50 per meal.

6) Medical Insurance Premium paid by the employer on behalf of Nitin is also

not taxable as perquisite.

7) The motor car is chargeable as under:

If the Car is owned / hired by the employee; expenses met by the employer & is
used by the employee partly for Official and partly for Personal purposes, the
taxable value of the perquisite would be the actual expenditure incurred by the
employer as reduced by the taxable value of the perquisite determined basis the
engine capacity, i.e., ₹ 36600 - ₹ (1800*12) = ₹ 15000.

QUESTION 4

A. Two sisters, Seema and Rashmi, are co-owners of a house property, with
50% share each in the property. The property was constructed prior to 1st April
1999. The property has 7 equal units and is situated in Bangalore. During the FY
2023-24, each co-owner occupied one unit each and the balance were let out at
a rental of ₹ 20,000 per unit per month. The Municipal Valuation (MV) was ₹
7,00,000 and the Municipal Taxes were @ 10% of the MV. Interest payable on
loan taken for construction was ₹ 4,00,000. One of the let-out units was vacant
for 6 months in the year.

Compute the Income from House Property for each of the sisters. Assuming
they have not opted for section 115BAC.
(6 MARKS)

SOLUTION

Computation of GAV ₹ ₹
Estimated Rent
Higher of:
1) Fair Rent -
2) Municipal Value 5,00,000
Limited to Standard Rent 5,00,000
 Annual Rent 12,00,000
Less: Unrealised Rent (1,20,000)
10,80,000
GAV (partly let out and partly self 10,80,000
occupied)
Less: Municipal Taxes paid by the owner during (50,000)
the PY
NAV 10,30,000
Less: Deductions u/s 24
30% NAV 3,09,000
Interest on borrowed capital 2,85,714
(5,94,714)
Income from House Property 4,35,286
Share of each Co-owner 2,17,643
Loss from House Property (self occupied (30,000)
portions)
Income from House Property (each co- 1,87,643
owner)

Notes:

1) Observe that the computation has been done for the 5 let out and 2 self-
occupied portions separately and commensurately.
2) Note that the Interest on Borrowed Capital for let out proportions is fully
allowable as deduction without any cap.
3) Note that the AV for the Self Occupied Portion is NIL and the Interest on
Borrowed Capital is restricted to ₹ 30,000 for each co-owner.

B. Mr. Kundan Lal, a trader at Kolkata, submits the P & L as under, for FY 2023-
24:

Profit & Loss Account for Year Ended 31st March, 2024
Particulars ₹ Particulars ₹
To Opening 1,00,000 By Sales 1,25,00,000
Stock
To Purchases 1,20,00,000 By Closing Stock 2,00,000
 To Gross Profit 6,00,000
Total 1,27,00,000 Total 1,27,00,000
To Rent, Rates, 1,08,000 By Gross Profit 6,00,000
Taxes
To Salaries 1,25,000 By Interest 5,000
Income
To Interest on 25,000
loan
To Depreciation 2,25,000
To Printing & 25,000
Stationery
To Postage & 1,750
Telegram
To Loss on Sale 12,190
of Shares (Short
Term)
To General 17,060
Expenses
To Net Profit 66,000
Total 6,05,000 Total 6,05,000

Additional Information:

a) Closing Stock & Opening Stock was under-valued by 10%

b) Salary includes ₹ 20.000 paid to a relative which was considered
unreasonable
c) The whole amount of Printing & Stationery was paid in Cash at one go
d) WDV of the Plant & Machinery on 1st April, 2022 was ₹ 12,00,000. Additions
of ₹ 5,00,000 were made on 1st June 2022 and on 1st Oct 2022, Machinery was
sold for ₹ 12,57,993
e) Rent & Rates included outstanding GST Liability for Mar 21, of ₹ 27,000, duly
paid within 7th April 2023
f) A donation of ₹ 12,000 was made to a public charitable trust during the year

You are required to:

a) Calculate the Profits / Gains from Business Profession u/s 44AD

You can assume that the entire amount of turnover was received by the account
payee cheque
(5 MARKS)

SOLUTION

Tax liability on presumptive basis, i.e., 6% of Gross Receipts (₹ 125,00,000

*6%) = ₹ 750,000

QUESTION 5

A. Mr Srinivasan, purchases 2000 equity shares in ABC Ltd., for ₹ 50 per share
(Brokerage 19%), in Feb 1999. He gets 200 Bonus shares in September, 2002.
He again gets 2200 bonus shares in September, 2009. FMV of the Shares on 1
April, 2003 was ₹ 125.

In January, 2024, he sells all the shares for ₹ 500 per share (Brokerage 29%).

Compute the Capital Gains Tax in the hands of Mr. Srinivasan in FY 2023-24.

(5 MARKS)
SOLUTION

Cost of Acquisition Nos. Per Share Total ₹

Original 2,000 50.50 1,01,000
Bonus Shares prior to 1 April, 2003 200 - 25,000
Bonus Share post 1 April, 2003 2,200 - -
Full value of Consideration 4,400 490.00 21,56,000
Indexed Cost of Acquisition
Original (2000 x 125 x 317/100) 7,92,500
Bonus (200 x 125 x 317/100) 79,250 (8,71,750)
Capital Gains (Long Term) 12,84,250

Note:

1. The brokerage is netted against the costs and sales vales

2. The Cost of Acquisition of Bonus Shares acquired prior to 1 April, 2002 is the
FMV on 1" April, 2002 and for the ones acquired post 1 April, 2002 is NIL
3. For the Original Shares, since the acquisition cost (₹ 50) is less than the FMV
(₹ 125) as on 1" April, 2002, the FMV as on 1 April, 2002 is considered for
computing the indexed cost of acquisition

B. Rahul who is a resident in India, is a person with disability. He provides the

following particulars of his income for the year ended 31.3.2024.

(a) Salary for working as a cable operator (per month) 18,000

(b) Interest on government securities (gross) 45,000
(c) Dividend from Indian Company 5,000
(d) Honorarium from school of orphanage for giving his service 49,000

He has donated ₹ 20,000 to the school for orphanage which is approved as a

charitable institution and contributed ₹ 2,000 to Prime Minister National Relief
Fund. He has also paid ₹3,000 by credit card as premium of mediclaim policy.
His father is also a person with disability and is dependent on him for medical
treatment and rehabilitation. Rahul spends ₹ 8,000 during the year on him.

Compute the Total Income for the Assessment Year 2024-25, assuming he has
deposited ₹ 20,000 in Public Provident Fund Account.

(6 MARKS)
SOLUTION

Computation of Total Income for the Assessment Year 2024-25

Income from salary ₹ ₹

Gross Salary 2,16,000
Less: Deduction (Standard) (50,000) 1,66,000
Income from other sources
Interest on Government Securities 45,000
Dividend from Indian Company Exempt
Honorarium 49,000 94,000
Gross Total Income 2,60,000
Less: Deductions:
(i) Under section 80C 20,000
 (ii) Under section 80D 3,000
(iii) Under section 80DD 75,000
(iv) Under section 80U 75,000
(v) Under section 80G
Prime Minister Relief Fund (100% of ₹2,000) 2,000
Orphanage School (50% of ₹ 8,700) 10% of 4,350
87,000 ₹ (2,60,000 - 1,73,000)
6350 (1,79,350)
Total Income 80,650

Note: The solution has been made assuming the assessee has not opted to pay
tax under section 115BAC of the Income tax Act, 1961.

C. Calculate Advance Tax Payable by Mr. Arun from the following estimated
incomes for the previous year 2023-24:

Business Income: ₹ 4,75,000;

Rent from house property: ₹ 36,000 per month;
Municipal taxes: ₹ 27,000;
Winning from games: ₹ 70,000 (net of TDS);
Life insurance premium paid for himself (sum assured: ₹ 5,00,000): ₹ 30,000.

(5 MARKS)
SOLUTION

Computation of Advance Tax payable by Mr. Arun - Previous Year 2023-

24 (Assessment Year 2024-25)

Estimated Total Income for the year:

Particulars ₹ ₹
Income from house property:
Gross Annual Value [Rental Income 4,32,000
(36,000 x 12)]
Less: Municipal taxes paid by owner (27,000)
Net Annual Value (NAV) 4,05,000
Less: Standard Deduction @30% of NAV (1,21,500) 2,83,500
Profits and gains of Business or Profession 4,75,000
 Income from other sources:
Winning from games (gross) [70000 x 100 1,00,000
(100%-30%)]
Gross Total Income (GTI) 8,58,500
Less: Deductions under Section 80C (30,000)
Total Income 8,28,500

Estimated Tax Liability

Particulars ₹ ₹
Tax on:
Winning from Games@ 30% [1,00,000 x 30%] 30,000
Balance Income @ Slab Rate [12,500+ 20% of 58,200
(7,28,500-5,00,000)]
Tax Payable 88,200
Add: Surcharge, if any Nil
Add: Cess @ 4% 3,528
Tax Liability 91,728
Less: TDS (30,000)
Advance Tax Liability 61,728
Advance Tax (Rounded off) 61,730

Advance Tax Instalments - Advance tax is payable as follows:

Upto % Cumulative Each Instalment

(Rate) (₹) (₹)
15.06.2023 15 9,259 [61,730 x 15%] 9,259
15.09.2023 45 27,778 [61,730 x 45%] 18,519
15.12.2023 75 46,297 [61,730 x 75%] 18,519
15.03.2024 100 61,730 [61,730 x 100%] 15,433

Note: Assuming assessee has opted for section 115BAC of the Income Tax Act,
1961.
 PART II: INDIRECT TAX (40 MARKS)
QUESTION 6

a. Pure Oils, Delhi has started the supply of machine oils and high-speed diesel in
the month of April, 20XX. The following details have been furnished by it for the
said month:
SI. No. Particulars `*
(i) Supply of machine oils in Delhi 2,00,000
(ii) Supply of high-speed diesel in Delhi 4,00,000
(iii) Supply made through Fortis Lubricants- an agent of Pure Oils in Delhi 3,75,000
(iv) Supply made by Pure Oils from its branch located in Punjab 1,80,000
* excluding GST

Answer the following questions from the above information:

1. Determine whether Pure Oils is liable for registration. (5 Marks)

2. Will your Answer change, if Pure Oils supplies machine oils amounting to ₹
2,50,000 from its branch located in Mizoram in addition to the above-mentioned
supplies? (3 marks)

b. Discuss the circumstances where registration is liable to be cancelled. (2 Marks)

SOLUTION:
(b) As per section 22 of the CGST Act, 2017 read with Notification No.10/2019, a supplier is liable to be
registered in the State/Union territory from where he makes a EXCLUSIVE supply of goods, if his aggregate
turnover in a financial year exceeds ₹40 lakhs.
However, if such taxable supplies are made from any of the specified special category
States, namely, States of Manipur, Mizoram, Nagaland and Tripura, , he shall be liable
to be registered if his aggregate turnover in a financial year exceeds ₹10 lakhs.
As per section 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate
value of:
i) All taxable supplies,
ii) All exempt supplies,
iii) Exports of goodsand/ or services and
iv) All inter-state supplies of persons having the same PAN.

The above is computed on all India basis. Further, the aggregate turnover excludes
central tax, state tax, union territory tax, integrated tax and cess. Moreover, the value of
inward supplies on which tax is payable under reverse charge is not taken into
account for calculation of 'aggregate turnover'.

Further, the explanation to section 22 provides that the expression "aggregate

turnover" shall include all supplies made by the taxable person, whether on his own
account or made on behalf of all his principals.

Section 9 of the CGST Act, 2017 provides that CGST is not leviable on five petroleum
products i.e. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and
aviation turbine fuel. As per section 2(47) of the CGST Act, 2017, exempt supply
includes non-taxable supply. Thus, supply of high-speed diesel in Delhi, being a non-
taxable supply, is an exempt supply and is, therefore, includible while computing the
aggregate turnover.

In the backdrop of the above-mentioned discussion, the aggregate turnover for the
month of April, 20XX is computed as under:
S. No. Particulars Amount
(in `)
(i) Supply of machine oils in Delhi 2,00,000
(ii) Add: Supply of high-speed diesel in Delhi 4,00,000
(iii) Add: Supply made through Fortis Lubricants - an agent of Pure -
Oils in Delhi
(iv) Add: Supply made by Pure Oils from its branch located in Punjab 1,80,000
Aggregate Turnover 7,80,000

Since the aggregate turnover does not exceed ₹40 Lakhs, Pure Oils is not liable to be
 registered.

If Pure Oils made supply of machine oils amounting to ₹2,50,000 from its branch in
Mizoram in addition to the above supply, then threshold limit of registration will be
reduced to ₹10 lakhs as Mizoram is one of the specified special Category States.

Aggregate Turnover in that case would be ₹7,80,000 + ₹2,50,000 = ₹10,30,000. So, if Pure Oils
supplies machine oils amounting to ₹2,50,000 from its branch in Mizoram, then it is liable to be
registered.

(b) Section 29(1) of the CGST Act, 2017 provides that the proper officer may, either on his own motion or on an
application filed by the registered person or by his legal heirs, in case of death of such person, cancel the
registration, in such manner and within such period as may be prescribed, having regard to the circumstances
where:
1. the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
2. there is anychange in theconstitution of thebusiness; or
3. the taxable person, other than the person registered under sub-section (3) of section 25, is no longer
liable to be registered under section 22 or section 24

Further, section 29(2) of the CGST Act, 2017 provides that the proper officer may
cancel the registration of a person from such date, including any retrospective date, as
he may deem fit, where, —
A. a registered person has contravened such provisions of the Act or the rules made thereunder as may
be prescribed; or
B. person paying tax under section 10 has not furnished his return within 3 months after the due date of
furnishing such return
C. any registered person, other than a person specified in clause (b), has not furnished returns for a
continuous period of six months (where he is paying tax on monthly basis) or; has not furnished return for
2 quarters if he is paying tax on quarterly basis (under QRMP)
D. any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced
business within six months from thedateof registration; or
E. Registration has been obtained by means of fraud, wilful misstatement or suppression of facts
 further, the proper officer shall not cancel the registration without giving the person an opportunity
of being heard.

QUESTION 7

Find out the time of supply in the following cases in which GST is payable under
reverse charge basis:

Date of receipt of Date of payment by Date of issue

goods/services recipient of of invoice by
goods/services suppliers
1. Goods – 04/07/2023 12/08/2023 29/06/2023
2. Services – 25/06/2023 10/08/2023 29/06/2023
3. Goods – 03/08/2023 12/08/2023 26/06/2023

(6 MARKS)
SOLUTION

Time of Supply for Goods as per section 12(3) of the CGST Act is earlier of the
following:

a. Date of receipt of goods Or;

b. Date of making payment by recipient of supply to the supplier Or;
c. Date immediately following 30 days from the date of issue of invoice.

Time of Supply of Services as per section 13(3) of the CGST Act is earlier of the
following:

a. Date of making payment by Recipient of the Supply to the Supplier Or;

b. Date immediately following 60 days from the date of issue of invoice

Further, “date of making payment” in the above cases shall be earlier of:

Date of entry of making payment in the books of accounts of recipient of supply

Or;
Date of Debit in his Bank Account.
Accordingly, Time of Supply shall be determined as under in the
following cases:

Sr. Date of receipt of Date of Date of Date Time of

No. goods/ services making issue of immediately Supply
payment by invoice by following 30
recipient of suppliers days from
goods/ the date of
services issue of
invoice in
case of
goods/ 60
days in case
of services
i. Goods – 04.07.2023 12.08.2023 29.06.2023 30.07.2023 04.07.2023
ii. Services – 25.06.2023 10.08.2023 29.06.2023 29.08.2023 10.08.2023
iii. Goods – 03.08.2023 12.08.2023 26.06.2023 27.07.2023 27.07.2023

QUESTION 8

A. Jai Hind Ltd. a manufacturing company in Delhi has opted for composition
scheme furnishes you the following information for the financial year 2023-24.
You are required to compute the Composition tax and total tax liability. Its
aggregate turnover during previous financial year 2022-23 was 1,20,00,000. Jai
Hind Ltd. made the following supplies during the year 2023-24:

S. No. Particulars Amount (₹)

1 Intra-state supply of goods chargeable @ 75,00,000
12% GST
2 Inward supplies on which tax is payable on 5,00,000
reverse charge @ 18%
3 Intra-state supplies of exempt goods 10,00,000
4 Intra-state supply of services chargeable @ 6,50,000
18% GST

(5 MARKS)
B. Jai Hind Ltd. wants to start another unit in Jaipur (Rajasthan) where the
company wants to obtain GST registration under Normal scheme to take
advantage of ITC. Can it do so?
(2 MARKS)

SOLUTION

A. Computation of Composition Tax liability and Total Tax liability of Jai

Hind Ltd. for the Financial Year 2023-24:

Sr. PARTICULARS Tax

No. Amount
(₹)
i. Intra-state Supply of goods {₹75,00,000 x 1%} 75,000
ii. Intra-state Supply of exempt goods {₹10,00,000 * 1%} 10,000
iii. Intra-state supply of services {₹6,50,000 * 1%} 6,500
Total Composition tax liability u/s 10 of CGST Act, 2017
read with Rule 7 of CGST Rules, 2017 91,500
Add: Tax payable on inward supplies on which tax is
payable under reverse charge basis {5,00,000 * 18%} 90,000
Total GST payable during Financial Year 2023-24 1,81,500

Notes:

1. The Aggregate Turnover for the preceding Financial Year was ₹1,20,00,000,
therefore, the maximum amount of services that could have been provided
by the manufacturing entity this year in order to continue under composition
scheme of section 10(1) of the CGST Act, 2017 shall be higher of the
following:

a. 10% of Aggregate Turnover of the preceding financial year {i.e. 10% of

₹1,20,00,000} ₹12,00,000
Or;
b. ₹5,00,000

Therefore, ₹12,00,000.
In given case, services supplied in the current Financial Year i.e. 2023-24 is
₹6,50,000 i.e. within the limit of ₹12,00,000 as computed above and
 therefore, it continues to be eligible for composition levy of section 10(1) of
CGST Act, 2017.

2. Since the entity is a manufacturer, tax payable under section 10 i.e. under
Composition levy shall be 1% of the Turnover in the state. Such rate is
applicable in lieu of tax payable under section 9 i.e. instead of tax at normal
rates of GST.

Moreover, It should be noted that even the turnover of exempt supplies shall
be considered in the same.

Further, such rate is applicable only for outward supply and not for inward
supplies. Hence, tax on inward supplies which is chargeable on Reverse
charge basis is taxed at normal rate i.e. 18%.

3. In order to pay the total tax, the person under composition scheme cannot
claim ITC. Hence, in this case, entire amount of ₹1,81,500 has to be paid in
cash.

B. As per proviso to section 10(2) of the CGST Act, 2017, a registered person
shall not be eligible to opt for composition levy of section 10(1) of CGST Act in
case all persons having same PAN do not opt for the same.

{When Jai Hind. Ltd. sets up another unit in Rajasthan, it will have a separate
registration under GST for the same, it being in another state.}

Jai Hind Ltd. cannot pay tax under normal levy under section 9 of CGST Act for
its proposed new unit in Jaipur (Rajasthan). {In case, it does so, then it will no
longer be eligible for composition scheme for existing unit in Delhi.}
 QUESTION 9

A. Oasis Pvt. Ltd., a registered supplier, is engaged in the manufacture of

taxable goods. The company provides the following information pertaining to
purchase made/services availed by it during the month of August:

S. Particulars GST (₹)

No.
(i) Raw spices purchase for personal use of directors 3,50,000
(ii) Electric machinery purchased for being used in the
manufacturing process 2,25,000
(iii) Club Membership fees for employees working in the
factory 1,55,000
(iv) Motor vehicle used for transportation of employee
(seating capacity 12 persons) 2,70,000
(v) Payment made to contractor for construction of staff
quarter 80,000

Determine the amount of Input Tax Credit (ITC) available with Oasis Pvt. Ltd.
for the month of August in the context of provision of CGST Act, 2017 by giving
the necessary explanation for treatment of various items. Subject to the
information given above, all the other conditions necessary for availing ITC have
been fulfilled.
(5 MARKS)
SOLUTION -

Computation of Input Tax Credit (ITC) available with Oasis Pvt. Ltd. for
the month of August

S. Particulars Amount
No. (₹)

(i) Raw spices purchase for personal use of directors Nil

[ITC is not available on goods used for personal
consumption as credit blocked under Section 17(5) of
Central Goods and Services Tax Act, 2017.]
(ii) Electric machinery purchased for being used in the
manufacturing process 2,25,000

(iii) Club Membership fees for employees working in the

factory Nil
[Covered under Blocked credit in terms of Section 17(5)
of Central Goods and Services Tax Act, 2017]

(iv) Motor vehicle used for transportation of employee Nil

[ITC on motor vehicles for transportation of persons
with seating capacity < 13 persons (including the
driver) is blocked except when the same are used for
(i) making further taxable supply of such motor
vehicles (ii) making taxable supply of transportation of
passengers (iii) making taxable supply of imparting
training on driving such motor vehicles.

In the given case, motor vehicle used for transportation

of the employee is covered under blocked credit in term
of section 17(5) of Central Goods and Services Tax Act,
2017]

(v) Payment made to contractor for construction of staff Nil

quarter

[ITC is not available on goods or services or both

received by a taxable person for construction of an
immovable property (other than plant or machinery) on
his own account including when such goods or services
or both are used in the course or furtherance of
business.]

Total available ITC 2,25,000

B. Nesamani started his business activities in the month of February in the State
of Orissa. He provided the following details:

Particulars Amount in ₹
(i) Outward supply of petrol (Intra State) 4,00,000
(ii) Transfer of exempt goods to his branch in 2,00,000
Rajasthan (Inter- State)
(iii) Outward supply of taxable goods by his branch in 5,00,000
Uttar Pradesh (Intra State)
(iv) Outward supply of services on which tax is 6,00,000
payable under RCM by the recipient of services
(Intra-State)
(v) Inward supply of services on which tax is 2,00,000
payable under RCM (Intra- State)

From the information given above, compute the aggregate turnover of

Nesamani and also decide whether he is required to get registration under GST.
Assume that the amounts given above are exclusive of taxes.
(5 MARKS)
SOLUTION
Particulars Amount (₹)
Computation of aggregate turnover of Nesamani
Outward supply of petrol 4,00,000
[Supply of petrol being a non-taxable supply is an exempt
supply. Value of exempt supply is includible in aggregate
turnover.]
Inter-State stock transfer of exempt goods 2,00,000
[Supply of taxable/exempt goods between distinct
persons is includible.]
Outward supply of taxable goods from Uttar Pradesh 5,00,000
branch [Value of outward supplies under same PAN are
includible.]
Outward supply of services taxable under reverse charge 6,00,000
[Includible in aggregate turnover.]
Inward supply of services taxable under reverse charge --
[Excludible from the aggregate turnover.]
 Aggregate turnover 17,00,000

For a supplier engaged in supply of goods and services from the States of Orissa
and Uttar Pradesh, the threshold limit of aggregate turnover to obtain
registration is ₹ 20 lakh. However, a person required to pay tax under reverse
charge has to obtain registration compulsorily irrespective of the quantum of
turnover.

Since in the given case, Nesamani is required to pay tax under reverse charge,
it is liable to obtain registration compulsorily irrespective of his quantum of
turnover.

QUESTION 10

A. Ms. Sejal, an importer has furnished the following information relating to

goods imported by her in March, 2023:

(i) Goods cleared from the Chennai port on 22/03/2023.

(ii) Goods sent for warehousing by submitting bill of entry and other
documents
(iii) FOB value of goods € (Euro) 20,000
(iv) Rate of exchange was 1 € = ₹ 70
(v) Rate of Customs Duty on this date was 12%
(vi)Goods were cleared from the warehouse for home consumption on
20/04/2023.
(vii)Rate of exchange on this date was 1 € = ₹ 71 and BCD was 10%.
(viii)IGST at 12% is applicable
(ix)Social Welfare surcharge may be taken at 10%

You are required to determine:

(i) The transaction value on which IGST is payable,

(ii)The value of import, and
(iii)The total Customs Duties payable by the importer.
(5 marks)
SOLUTION

Computation of value of import and customs duty

 FOB Value of import € 20,000
Add: 20% Freight on FOB € 4,000
Add: 1.125% Insurance on FOB € 225
CIF/Assessable Value € 24,225
₹
Assessable value (i.e., 24225 × ₹ 70) 16,95,750
Add: BCD 10% (i.e., 16,95,750 × 10%) 1,69,575
Add: Social Welfare Surcharge @ 10% (i.e. 16,958
169575 @ 10%)
Transaction value subject to GST 18,82,283
Add: IGST (i.e., 18,82,283 @ 12%) 2,25,874
Value of import 21,08,157
Value of Customs duties 4,12,407

B. You are required to write Short Note on Transaction value of identical goods
under the Customs Act, 1962
(2 marks)
SOLUTION

Identical goods means the goods must be same in all respects, including
physical quantity. This method is applicable only when following conditions are
satisfied -
1. Identical goods can be compared with the other goods of the same
country from which import takes place.
2. These goods must be valued at a price which is produced by the same
manufacturer.
3. If price is not available then the price of other manufacturers of the same
country is to be taken into account.
4. If more than one value of identical goods is available, lowest of such value
should be taken.
5. A condition for adjustment because of different commercial levels or
different quantities is that such adjustment, whether it leads to an
increase or a decrease in the value, be made only on the basis of
demonstrated evidence that clearly establishes the reasonableness and
accuracy of the adjustment, e.g. valid price lists containing prices
referring to different levels or different quantities.