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CA Intermediate · Taxation · Charge of GST

Kiran Foods Ltd., Chennai, supplies packaged snacks in Tamil Nadu. Its aggregate turnover is Rs 3 crore, it is registered and has opted for composition (manufacturer) at 1%. During the quarter its turnover was Rs 20,00,000 in taxable goods. Which statement is correct?

Kiran Foods pays composition tax of Rs 20,000, being 1% of Rs 20,00,000 turnover, split equally between CGST and SGST. As a composition dealer it cannot collect tax from customers, issues a bill of supply and cannot take input tax credit.

  1. AIt pays tax under section 10 at 1% of turnover, i.e. Rs 20,000, split equally between CGST and SGST, and cannot collect tax from customersCorrect
  2. BIt pays 18% on turnover and claims input tax credit
  3. CIt pays 1% as IGST on turnover
  4. DIt pays 1% of turnover, collects tax separately from customers on the invoice

Explanation

Under composition, tax is 1% of turnover = Rs 20,000, divided as 0.5% CGST (Rs 10,000) and 0.5% SGST (Rs 10,000). A composition dealer cannot collect tax from customers or issue a tax invoice, and cannot claim ITC. IGST does not apply to purely intra-State supplies.

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