CS Executive · Tax Laws and Practice · Procedural Compliance under GST
Ravi Enterprises' registration is cancelled on 1 July. On 30 June it held inputs with ITC of ₹40,000, and the output tax payable on those inputs is ₹46,000. Capital goods are ignored. What amount must it pay under section 29(5)?
The person must pay ₹46,000. On cancellation, section 29(5) requires payment of the higher of the input tax credit on stock (₹40,000) or the output tax payable on that stock (₹46,000), so the higher figure applies.
- A₹40,000
- B₹46,000Correct
- C₹6,000
- D₹86,000
Explanation
Section 29(5) requires payment of the ITC on inputs held in stock or the output tax payable on them, whichever is higher. Higher of 40,000 and 46,000 is 46,000. Paying only the ITC (₹40,000) ignores the 'whichever is higher' rule, and ₹6,000 is merely the difference.
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