Taxation - Income TaxQuestion 5581 of 146
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11. Amount of ITC that can be claimed by Mr. Mohanraj, for the month of June 2024 including RCM transactions if any, will be__________ each under CGST and SGST.

Options

A` 18,900
B` 20,700
C` 30,900
D` 32,700 Case Scenario - IV Mouriya & Co, registered under GST, is engaged in textile manufacturing business in the State of Tamilnadu. For the Financial year 2017-18, the due date of furnishing annual return in GSTR-9 was 07.02.2020. But their accountant submitted the same on 07.03.2020. No appeal or revision or investigation was faced for the said financial year by the firm. They supplied Dhoties and Sarees to various State Government during the month of March 2024, details of which are as follows: (i) Supplied Sarees worth ` 2,80,000 including GST @ 12% to Government of Tamilnadu for Tamil New year distribution. (ii) Supplied Dhoties worth ` 3,00,000 excluding GST @ 12% to Government of Tamilnadu for Scheme distribution. (iii) Supplied both Sarees and Dhoties to Government of Andhra Pradesh for Telugu New Year, valued at ` 3,50,000 including GST @ 12% . The said supply was made to its Govt undertaking in Chennai, Tamilnadu. Invoice was issued to the Andhra Govt in Tirupati. During the month of April 2024, the firm made wrong availment of excess ITC under IGST head for an amount of ` 1,00,000. During the time period starting from excess availment upto such reversal, the balance in credit ledgers of CGST, SGST and IGST were, ` 70,000, ` 20,000 and ` 20,000 respectively. The Firm identified the wrong availment and reversed the excess ITC availed. Ignore break-up of tax rate between CGST/SGST/IGST for GST TDS purposes. Based on the above information, choose the most appropriate answer for the questions 12-14.
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Correct Answer

✅ Option A — ` 18,900

All Options:

  • A` 18,900 ✓
  • B` 20,700
  • C` 30,900
  • D` 32,700 Case Scenario - IV Mouriya & Co, registered under GST, is engaged in textile manufacturing business in the State of Tamilnadu. For the Financial year 2017-18, the due date of furnishing annual return in GSTR-9 was 07.02.2020. But their accountant submitted the same on 07.03.2020. No appeal or revision or investigation was faced for the said financial year by the firm. They supplied Dhoties and Sarees to various State Government during the month of March 2024, details of which are as follows: (i) Supplied Sarees worth ` 2,80,000 including GST @ 12% to Government of Tamilnadu for Tamil New year distribution. (ii) Supplied Dhoties worth ` 3,00,000 excluding GST @ 12% to Government of Tamilnadu for Scheme distribution. (iii) Supplied both Sarees and Dhoties to Government of Andhra Pradesh for Telugu New Year, valued at ` 3,50,000 including GST @ 12% . The said supply was made to its Govt undertaking in Chennai, Tamilnadu. Invoice was issued to the Andhra Govt in Tirupati. During the month of April 2024, the firm made wrong availment of excess ITC under IGST head for an amount of ` 1,00,000. During the time period starting from excess availment upto such reversal, the balance in credit ledgers of CGST, SGST and IGST were, ` 70,000, ` 20,000 and ` 20,000 respectively. The Firm identified the wrong availment and reversed the excess ITC availed. Ignore break-up of tax rate between CGST/SGST/IGST for GST TDS purposes. Based on the above information, choose the most appropriate answer for the questions 12-14.

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Detailed Solution & Explanation

Let us calculate the eligible Input Tax Credit (ITC) for Mr. Mohanraj for June 2024:
1. Purchase of goods for further supply = ₹5,00,000\displaystyle ₹5,00,000. Mr. Mohanraj gifted stock worth ₹2,00,000\displaystyle ₹2,00,000 to his daughter.
- Under Section 17(5)(h) of the CGST Act, 2017, ITC is blocked on goods disposed of by way of gift.
- Thus, the eligible purchase value is ₹5,00,000−₹2,00,000=₹3,00,000\displaystyle ₹5,00,000 - ₹2,00,000 = ₹3,00,000.
- Eligible ITC on purchases = ₹3,00,000×6%=₹18,000\displaystyle ₹3,00,000 \times 6\% = ₹18,000 each under CGST and SGST.
2. Rent of ₹10,000\displaystyle ₹10,000 paid to the Local Municipal Corporation for the shop is liable under RCM.
- GST rate on services is 9% CGST and 9% SGST.
- Tax payable under RCM = ₹10,000×9%=₹900\displaystyle ₹10,000 \times 9\% = ₹900 each under CGST and SGST.
- Since Mr. Mohanraj pays this tax, he is eligible to claim ITC on it in the same month.
- Eligible ITC on RCM = ₹900\displaystyle ₹900 each under CGST and SGST.
3. Rent of ₹20,000\displaystyle ₹20,000 paid for residential house property for personal use is not used in the course or furtherance of business, so no ITC is available.
Total eligible ITC = ₹18,000+₹900=₹18,900\displaystyle ₹18,000 + ₹900 = ₹18,900 each under CGST and SGST.

Note: If the transfer to the daughter is treated as a supply between related persons under Schedule I, the ITC would be allowed on the full purchase of ₹5,00,000\displaystyle ₹5,00,000 (₹30,000\displaystyle ₹30,000) and the total ITC would be ₹30,900\displaystyle ₹30,900 (Option C). However, according to the official answer key, the credit is blocked under Section 17(5)(h), making ₹18,900\displaystyle ₹18,900 the correct option.

Hence, **Option A** is the correct answer.

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