Taxation - Income TaxQuestion 5611 of 146
All Questions

15. Mr. Arun, a registered person, is del-credere agent (DCA) of Udhay Limited and AST Limited. Mr. Arun reported following transactions for the month of October 2024: (i) Sale of Goods of Udhay Limited in DCA Capacity for ` 4,50,000 (Invoices are issued in the name of Udhay Limited) (ii) Sale of Goods of AST Limited in DCA Capacity for ` 2,20,000 (Invoices are issued by Mr. Arun in his own name) (iii) To both the principals he has given guarantee for the realization of payments from customers and to fulfil it, he extends short-term transaction-based loan to the customer and charged interest for the same. Interest earned from customers of Udhay Limited ` 45,000 Interest earned from customer of AST Limited ` 22,000 The value of supply of goods to customers on which tax will be paid by Mr. Arun is __________and value of exempt supply is _______________.

Options

A` 6,70,000 and ` 67,000
B` 2,20,000 and ` 67,000
C` 2,42,000 and ` 45,000
D` 2,87,000 and ` 45,000 (2 Marks)
For any discrepancies in this question, email contact@cadada.in

Correct Answer

Option C` 2,42,000 and ` 45,000

All Options:

  • A` 6,70,000 and ` 67,000
  • B` 2,20,000 and ` 67,000
  • C` 2,42,000 and ` 45,000
  • D` 2,87,000 and ` 45,000 (2 Marks)

Ad

Detailed Solution & Explanation

Correct Answer: Option **C** **Explanation:** Under GST, the treatment of transactions by a Del Credere Agent (DCA) and interest charged on loans extended to customers is governed by Circular No. 73/47/2018-GST:
1. **Transaction (i) u/s Udhay Limited:** - Invoices are issued in the name of the principal, Udhay Limited. - Since Mr. Arun does not issue invoices in his own name, he is not considered the supplier of these goods under Schedule I of the CGST Act. The supply value of ₹ 4,50,000 will be taxed in the hands of Udhay Limited, not Mr. Arun. - The short-term transaction-based loan extended to the customers of Udhay Limited is treated as a separate supply of service by Mr. Arun to the customers. The interest earned (₹ 45,000) represents interest on loans/advances and is exempt from GST under Entry 27 of Notification No. 12/2017-Central Tax (Rate).
2. **Transaction (ii) u/s AST Limited:** - Invoices are issued by Mr. Arun in his own name. - Therefore, Mr. Arun is considered the supplier of these goods under Paragraph 3 of Schedule I of the CGST Act. - Value of supply of goods by Mr. Arun = ₹ 2,20,000. - For a Schedule I agent, the interest charged for the extension of credit/loans (₹ 22,000) is included in the value of the supply of goods under Section 15(2)(d) of the CGST Act, 2017 (as interest/late fee/penalty for delayed payment). - Value of taxable supply of goods on which tax is paid by Mr. Arun = ₹ 2,20,000 + ₹ 22,000 = ₹ 2,42,000.
3. **Summary:** - Taxable supply of goods on which tax will be paid by Mr. Arun = **₹ 2,42,000**. - Value of exempt supply by Mr. Arun = **₹ 45,000**. Hence, **Option C** is the correct answer.

Key Concepts to Understand

More Questions from Taxation - Income Tax

Ready to Master Taxation - Income Tax?

Practice all 146 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free