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CA Intermediate · Taxation · Charge of GST

Anand, a registered person in Gujarat, supplies legal services to Zenith Pvt Ltd, a registered company in Gujarat. Legal services by an individual advocate to a business entity are notified under reverse charge, with the recipient liable to pay GST. The fee is Rs 1,00,000 and the rate is 18%. Which statement is correct?

Zenith Pvt Ltd must pay Rs 18,000 under reverse charge, made up of Rs 9,000 CGST and Rs 9,000 SGST. The advocate's service to a business entity is notified for reverse charge, and the supply is intra-State, so CGST and SGST apply rather than IGST.

  1. AAnand must collect and pay Rs 18,000 GST
  2. BZenith Pvt Ltd must pay Rs 18,000 GST under reverse charge, as CGST Rs 9,000 and SGST Rs 9,000Correct
  3. CZenith Pvt Ltd must pay Rs 18,000 as IGST
  4. DNo GST is payable by anyone as the supplier is an individual

Explanation

Under reverse charge the recipient pays tax instead of the supplier. The supply is intra-State, so tax is 9% CGST plus 9% SGST on Rs 1,00,000, i.e. Rs 9,000 each. IGST applies only to inter-State supplies.

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