Taxation - Income TaxQuestion 5632 of 146
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9. Tax liability of Veena & Co. for the month of July 2023 is `____________each under CGST and SGST.

Options

A5,000
B9,000
C10,000
D14,000 (2 Marks)
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Correct Answer

Option A5,000

All Options:

  • A5,000
  • B9,000
  • C10,000
  • D14,000 (2 Marks)

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Detailed Solution & Explanation

Let us determine the tax liability of Veena & Co. for the month of July 2023:
1. **Composition Scheme Eligibility:**
- In the preceding financial year, the turnover was u20b9100textLakhs\displaystyle \\u20b9100 \\text{ Lakhs}, which is within the u20b91.5textCrore\displaystyle \\u20b91.5 \\text{ Crore} threshold. Hence, they are eligible for the composition scheme under Section 10(1) of the CGST Act, 2017.
- A trader opting for the composition scheme is allowed to supply services up to 10\\% of their turnover in the preceding year or u20b95textLakhs\displaystyle \\u20b95 \\text{ Lakhs}, whichever is higher.
- Limit for services = max(10\displaystyle \\max(10\\% \\times \\u20b9100 \\text{ Lakhs}, \\u20b95 \\text{ Lakhs}) = \\u20b910 \\text{ Lakhs}.
- The value of services supplied in July 2023 was u20b92textLakhs\displaystyle \\u20b92 \\text{ Lakhs}, which is well within the u20b910textLakhs\displaystyle \\u20b910 \\text{ Lakhs} limit.
2. **Tax Rate under Composition Scheme:**
- For a trader paying tax under Section 10(1) & (2) of the CGST Act, the composition rate is 1\\% (0.5\displaystyle 0.5\\% CGST and 0.5\displaystyle 0.5\\% SGST) of the turnover of taxable supplies of goods and services in the State.
- Aggregate turnover in July 2023 = u20b910textLakhs\displaystyle \\u20b910 \\text{ Lakhs}.
- CGST liability = 0.5\displaystyle 0.5\\% \\times \\u20b910,00,000 = \\u20b95,000.
- SGST liability = 0.5\displaystyle 0.5\\% \\times \\u20b910,00,000 = \\u20b95,000.

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

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