CMA Intermediate · Direct and Indirect Taxation · Composition Levy
Anand Sweets, a restaurant service provider, opted for composition and has a turnover of Rs 40,00,000 in the State during a year. Taking only the rate table in rule 7 of the CGST Rules, 2017 (supplies under clause (b) of paragraph 6 of Schedule II), what is its composition tax?
Composition tax is Rs 1,00,000. Suppliers of supplies under clause (b) of paragraph 6 of Schedule II pay two and a half per cent of turnover in the State, and 2.5% of Rs 40,00,000 equals Rs 1,00,000.
- ARs 20,000
- BRs 1,00,000Correct
- CRs 1,20,000
- DRs 2,00,000
Explanation
Row 2 of the table gives 2.5% of turnover in the State for supplies under clause (b) of paragraph 6 of Schedule II. Tax = 40,00,000 x 2.5% = Rs 1,00,000. Rs 20,000 uses the 0.5% rate; Rs 1,20,000 uses 3%.
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