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CA Intermediate · Taxation · Charge of GST

Mehta Industries, Ahmedabad (registered), sold goods to Ravi Stores in Gujarat for Rs 4,00,000 at 18% GST, and separately to Joshi Brothers in Mumbai for Rs 3,00,000 at 18%. It also received legal services from a Gujarat advocate worth Rs 50,000 (RCM, GST 18%). Assuming all amounts exclude tax, what is the total output tax liability under forward charge and reverse charge combined, and what is its composition?

Total liability is Rs 1,35,000: Rs 1,26,000 under forward charge (18% on Rs 7,00,000) plus Rs 9,000 under reverse charge (18% on Rs 50,000). The Gujarat sale carries CGST and SGST, the Mumbai sale IGST, and the RCM is paid by Mehta as recipient.

  1. ATotal Rs 1,89,000: forward charge Rs 1,26,000 and RCM Rs 9,000
  2. BTotal Rs 1,35,000: forward charge Rs 1,26,000 and RCM Rs 9,000Correct
  3. CTotal Rs 1,26,000: forward charge only
  4. DTotal Rs 1,35,000: forward charge Rs 1,35,000

Explanation

Forward charge: 18% x (4,00,000 + 3,00,000) = 18% x 7,00,000 = Rs 1,26,000 (CGST 36,000 + SGST 36,000 for Gujarat; IGST 54,000 for Mumbai). RCM: 18% x 50,000 = Rs 9,000 payable by Mehta. Total = Rs 1,35,000. Rs 1,89,000 wrongly adds an extra amount and omits arithmetic consistency.

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