CS Executive · Tax Laws and Practice · Levy and Collection of GST
Under the second proviso to section 10(1), a composition taxpayer supplying goods may also supply services (other than those in clause (b) of paragraph 6 of Schedule II) up to a limit. Gupta Hardware had turnover of ₹30,00,000 in a State in the preceding financial year. What is the maximum value of such services it may supply?
The maximum is ₹5,00,000. The second proviso permits services up to the higher of ten per cent of the preceding year's State turnover or ₹5 lakh; ten per cent here is only ₹3,00,000, so the higher figure of ₹5,00,000 applies.
- A₹3,00,000
- B₹5,00,000Correct
- C₹30,00,000
- D₹8,00,000
Explanation
The limit is ten per cent of the preceding year's turnover in the State or ₹5 lakh, whichever is higher. Ten per cent of ₹30,00,000 is ₹3,00,000, which is lower than ₹5,00,000, so the limit is ₹5,00,000. The ₹3,00,000 option ignores the 'whichever is higher' rule.
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