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CA Intermediate · Taxation · Charge of GST

Verma Foods (Lucknow, Uttar Pradesh), a registered supplier, has aggregate turnover below the limit and opts for the composition scheme as a manufacturer. Its turnover of taxable goods in a quarter is Rs 8,00,000. The composition rate for manufacturers is 1% (0.5% CGST + 0.5% SGST). What tax is payable by Verma Foods for the quarter?

Rs 8,000 is payable. A composition manufacturer pays 1% of turnover, made up of 0.5% CGST and 0.5% SGST. On Rs 8,00,000 this is Rs 8,000, being Rs 4,000 each of CGST and SGST.

  1. ARs 4,000
  2. BRs 8,000Correct
  3. CRs 14,400
  4. DRs 1,440

Explanation

Composition tax is computed on turnover in the State at the prescribed rate. 1% of Rs 8,00,000 is Rs 8,000, comprising CGST Rs 4,000 and SGST Rs 4,000. Option A takes only one component, which is wrong because both are payable.

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