CS Executive · Tax Laws and Practice · Levy and Collection of GST
Sharma Traders, a registered trader of goods (not a manufacturer, not a restaurant), opted for composition. Its turnover in the State for the quarter is Rs 8,00,000, all intra-State taxable supplies. Taking the maximum rate permitted by section 10(1) for 'other suppliers', what is the maximum composition tax for the quarter?
The maximum composition tax is Rs 4,000. For suppliers other than manufacturers and restaurant-type suppliers, section 10(1)(c) caps the rate at half per cent of turnover in the State, and 0.5% of Rs 8,00,000 equals Rs 4,000.
- ARs 4,000Correct
- BRs 8,000
- CRs 20,000
- DRs 24,000
Explanation
Section 10(1)(c) caps the rate at half per cent of turnover in State for other suppliers. 0.5% of Rs 8,00,000 = Rs 4,000. Rs 8,000 uses the 1% manufacturer rate, and Rs 20,000 uses the 2.5% rate for restaurant-type supplies.
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