Taxation - Income TaxQuestion 5588 of 146
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4. Paid fee to Local Municipal corporation for renewal of the company's factory License for the financial year 2024-2025. 4,800 Additional Information: (i) All above figures are exclusive of taxes, wherever applicable. (ii) Assume the rate of GST as 18%, 9% and 9% for IGST, CGST/SGST respectively. (iii) Turnover of Nootan Limited for the preceding financial year was ` 67 lakh. You are required to compute the GST payable by Nootan Limited under Reverse Charge basis for the month of June 2024. Reason for the treatment of each item should form part of the answers. (5 Marks) (

Options

AComputation of GST Payable by Nootan Limited under reverse charge S. No. Particulars CGST (`) SGST (`)
BDetermine the Place of Supply for the following independent cases, by briefly stating the relevant provisions : (i) Marxy Pharmaceuticals, registered under GST at Jaipur, Rajasthan hires Sargam Events LLP, registered under GST at Sagar, Madhya Pradesh for its annual event to be held in Gandhinagar, Gujarat. (ii) PSL Ltd., a registered person in Chandigarh, Punjab orders from CMR Ltd., a registered person in Ranchi, Jharkhand for delivery of goods to MHT Ltd., a registered person in Ranchi, Jharkhand. You are required to determine PoS for both of the above supplies made by CMR Ltd. as well as PSL Ltd. (5 Marks) Answer (
C
D
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Correct Answer

Option AComputation of GST Payable by Nootan Limited under reverse charge S. No. Particulars CGST (`) SGST (`)

All Options:

  • AComputation of GST Payable by Nootan Limited under reverse charge S. No. Particulars CGST (`) SGST (`)
  • BDetermine the Place of Supply for the following independent cases, by briefly stating the relevant provisions : (i) Marxy Pharmaceuticals, registered under GST at Jaipur, Rajasthan hires Sargam Events LLP, registered under GST at Sagar, Madhya Pradesh for its annual event to be held in Gandhinagar, Gujarat. (ii) PSL Ltd., a registered person in Chandigarh, Punjab orders from CMR Ltd., a registered person in Ranchi, Jharkhand for delivery of goods to MHT Ltd., a registered person in Ranchi, Jharkhand. You are required to determine PoS for both of the above supplies made by CMR Ltd. as well as PSL Ltd. (5 Marks) Answer (
  • C
  • D

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Detailed Solution & Explanation

Option A contains the correct computation of the GST payable under reverse charge by Nootan Limited for the month of June 2024:

1. Remuneration paid to Mr. Madan (Director): Remuneration subject to TDS u/s 194J (11,50,000\displaystyle ₹11,50,000) represents professional services which are outside the scope of employee-employer services (Schedule III). Hence, tax is payable under reverse charge (RCM) by the recipient company, Nootan Ltd., at 18% (9% CGST + 9% SGST).
- CGST = 9%×11,50,000=1,03,500\displaystyle 9\% \times ₹11,50,000 = ₹1,03,500
- SGST = 9%×11,50,000=1,03,500\displaystyle 9\% \times ₹11,50,000 = ₹1,03,500
- Note: Salary remuneration of 8,50,000\displaystyle ₹8,50,000 subject to TDS u/s 192 is in the course of employment, covered under Schedule III, and is not a supply.
2. Paid rent to Indian Railways: Renting of immovable property by the Government to a registered person is generally under RCM. However, services supplied by the Ministry of Railways (Indian Railways) are specifically excluded from RCM and are taxed under forward charge. Hence, RCM liability is Nil.
3. Security services from XYZ Security Pvt. Ltd.: RCM is applicable on security services only when provided by a non-corporate person to a registered person. Since XYZ Security is a private limited company (a body corporate), RCM is not applicable. RCM liability is Nil.
4. Renewal fee for factory license to Municipal Corporation: Services by Government/local authority are exempt from GST where the consideration does not exceed 5,000\displaystyle ₹5,000. Since the renewal fee is 4,800\displaystyle ₹4,800, it is exempt. RCM liability is Nil.

Option B contains the Place of Supply (PoS) answers for the independent cases:
- Case (i): Organization of event for registered person (Marxy Pharmaceuticals) is the location of the recipient, which is Jaipur, Rajasthan.
- Case (ii): Bill to ship to model for goods (CMR Ltd. to PSL Ltd. to MHT Ltd.) place of supply is the principal place of business of the third person who directs the supply, which is Chandigarh, Punjab.

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

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