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CA Intermediate · Taxation · Charge of GST

Vikram Associates, a registered person in Lucknow, received legal services worth Rs 3,00,000 (taxable value) from an advocate in Lucknow who is an individual. GST on legal services by an individual advocate to a business entity is 18% and is under reverse charge. Vikram Associates also has Rs 1,00,000 of GST output liability on its forward charge supplies. Who pays the GST on the legal services and what is the amount, ignoring ITC?

Vikram Associates pays Rs 54,000 as the recipient under reverse charge, split into Rs 27,000 CGST and Rs 27,000 SGST because the supply is intra-State. The advocate does not pay, and the separate Rs 1,00,000 forward-charge liability is not part of this amount.

  1. AThe advocate pays Rs 54,000
  2. BVikram Associates pays Rs 54,000 as CGST Rs 27,000 and SGST Rs 27,000Correct
  3. CVikram Associates pays Rs 54,000 as IGST
  4. DVikram Associates pays Rs 1,54,000 in total on legal services

Explanation

Under reverse charge the recipient pays. 18% of Rs 3,00,000 = Rs 54,000. The supply is intra-State, so it is CGST Rs 27,000 and SGST Rs 27,000. The Rs 1,00,000 relates to other supplies and is not part of this.

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