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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Meenakshi Textiles Pvt Ltd imports fabric. The assessable value is Rs 10,00,000. Basic Customs Duty (BCD) is 10%, Social Welfare Surcharge (SWS) is 10% of BCD, and IGST is 12% under section 3(7) of the Customs Tariff Act. No other duties apply. What is the IGST payable on import?

IGST is Rs 1,33,200. The IGST base is assessable value plus BCD plus social welfare surcharge, i.e. 10,00,000 + 1,00,000 + 10,000 = Rs 11,10,000, and 12% of that is Rs 1,33,200. Charging IGST on assessable value alone understates the tax.

  1. ARs 1,20,000
  2. BRs 1,32,000
  3. CRs 1,33,200Correct
  4. DRs 1,34,400

Explanation

BCD = 1,00,000. SWS = 10% of 1,00,000 = 10,000. Value for IGST = 10,00,000 + 1,00,000 + 10,000 = 11,10,000. IGST at 12% = 1,33,200. Option A ignores BCD and SWS; option B ignores SWS.

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