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CS Executive · Tax Laws and Practice · Levy and Collection of GST

Gupta Foods is a composition dealer. It became liable for registration on 1 August, having made taxable supplies of Rs 6,00,000 from 1 April to 31 July. From 1 August to 31 March of that year, it made taxable intra-State supplies of Rs 30,00,000 and earned Rs 50,000 interest on loans advanced (exempt). Taking the 1% rate and applying Explanation 2 to section 10, what is the composition tax payable for the period after registration?

The tax payable is Rs 30,000. Explanation 2 to section 10 excludes both supplies before liability for registration and exempt interest on loans from turnover in State. The remaining turnover is Rs 30,00,000, and 1% of it is Rs 30,000.

  1. ARs 30,000Correct
  2. BRs 30,500
  3. CRs 36,000
  4. DRs 36,500

Explanation

Under Explanation 2, turnover in State for determining tax excludes supplies made before the date of becoming liable for registration (Rs 6,00,000) and exempt interest on loans (Rs 50,000). Taxable turnover is Rs 30,00,000, and 1% gives Rs 30,000. Rs 36,000 wrongly includes pre-registration supplies, and Rs 30,500 includes the interest.

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