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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

Mehta Foods, a composition taxpayer manufacturing in Gujarat, had turnover in the State of Rs 60,00,000 in the preceding financial year. Under the second proviso to section 10(1), up to what value of services (other than those in clause (b) of paragraph 6 of Schedule II) can it supply in the current year?

The limit is Rs 6,00,000. The proviso permits services up to ten per cent of preceding year turnover in the State or Rs 5 lakh, whichever is higher; ten per cent of Rs 60 lakh is Rs 6 lakh, which is higher.

  1. ARs 5,00,000 because the 10% figure of Rs 6,00,000 is lower
  2. BRs 6,00,000 because ten per cent of Rs 60,00,000 is higher than Rs 5,00,000Correct
  3. CRs 3,00,000, being 5% of turnover
  4. DNil, because composition persons cannot supply any services

Explanation

The proviso allows services of value not exceeding ten per cent of preceding year turnover in the State or Rs 5 lakh, whichever is higher. 10% of Rs 60,00,000 is Rs 6,00,000, which exceeds Rs 5,00,000, so Rs 6,00,000 applies.

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