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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Overview of Goods and Services Tax

A practice prevailed of charging 12% central tax on a supply actually taxable at 18% (compare to central tax rates applied in total, assume 6% vs 9% central tax). A notification under Section 11A is issued for the period of the practice. On a supply of ₹2,00,000 value, what central tax is the supplier not required to pay?

The supplier is relieved only of the excess central tax, which is ₹6,000 (9% less 6% of ₹2,00,000). The ₹12,000 levied under the practice stays payable, because Section 11A covers only the short-levied portion.

  1. A₹6,000, being the central tax in excess of that levied under the practiceCorrect
  2. B₹12,000, being the central tax actually levied
  3. C₹18,000, being the whole central tax at 9%
  4. DNil, since tax already levied cannot be relieved

Explanation

Under clause (b)(ii), only the central tax in excess of that payable under the practice is relieved. Leviable 9% of 2,00,000 = 18,000; levied 6% = 12,000; excess = 6,000. The 12,000 already levied remains payable, so the 18,000 option is wrong.

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