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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

Kiran Traders, Jaipur, imported a service on which tax under the existing law was paid in part before the appointed day: Rs 30,000 paid out of total tax Rs 80,000 that would be payable. The import was made after the appointed day. What amount is payable under the IGST Act, 2017, section 21?

Rs 50,000 is payable. Under the second proviso to section 21 of the IGST Act, where tax was paid in part under the existing law, only the balance is payable: 80,000 less 30,000 paid equals 50,000. Full payment would have made it nil.

  1. ARs 80,000, as the earlier payment is ignored
  2. BRs 30,000, being the tax already paid
  3. CNil, because the transaction was initiated before the appointed day
  4. DRs 50,000, being the balance of taxCorrect

Explanation

The second proviso to section 21 states that where tax was paid in part under the existing law, the balance amount of tax is payable under the Act. Balance = 80,000 - 30,000 = Rs 50,000. Rs 80,000 ignores the proviso, and nil would apply only if tax was paid in full.

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