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CA Intermediate · Taxation · Payment of Tax

Kaveri Traders, a registered regular taxpayer in Pune, has the following balances in its electronic ledgers on the due date of payment for a month: IGST credit Rs 40,000, CGST credit Rs 10,000, SGST credit Rs 25,000. Its output liability for the month is: IGST Rs 30,000, CGST Rs 20,000, SGST Rs 15,000. All amounts relate to the same month. Applying the rules on utilisation of input tax credit, how much must Kaveri pay in cash in total?

No cash is payable. IGST credit first clears IGST liability of Rs 30,000, the Rs 10,000 balance plus CGST credit of Rs 10,000 clears CGST of Rs 20,000, and SGST credit of Rs 25,000 covers SGST of Rs 15,000. All three liabilities are fully met from credit.

  1. ARs 0Correct
  2. BRs 5,000
  3. CRs 10,000
  4. DRs 15,000

Explanation

IGST liability Rs 30,000 is set off by IGST credit Rs 30,000, leaving Rs 10,000 IGST credit. CGST liability Rs 20,000: CGST credit Rs 10,000 is used first, and the remaining Rs 10,000 is met from the leftover IGST credit. SGST liability Rs 15,000 is met from SGST credit Rs 25,000. Nothing is payable in cash. Rs 10,000 is wrongly shown by those who ignore the IGST balance for CGST.

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