M/s Cute & Co., a partnership firm, registered supplier under GST in Bengaluru (Karnataka State), has provided the following information for the…

CA Intermediate · Taxation · RTP · May 2024
M/s Cute & Co., a partnership firm, registered supplier under GST in Bengaluru (Karnataka State), has provided the following information for the month of October, 2023: S. No. Details of transactions Amount (₹) (i) Intra-State taxable supply of Direct Selling Agent (DSA) service to public sector Bank. 2,50,000 (ii) Rent paid to a residential dwelling taken for running an office for providing DSA services; Owner of the residential property was not registered under GST; This is an intra-State supply availed. 25,000 (iii) Purchased a car for the official use of managing partners of the Firm for business use (Inter-State purchase). 9,00,000 (iv) Availed Information Technology services for their business from Partner's friend Mr Allan Waugh from Melbourne, Australia. Mr. Waugh refused to take any consideration. Open Market value of said service was - 1,25,000. (Inter-State transactions). Nil (v) Provided training and performance appraisal services in Bengaluru to following persons: (a) ABC Private Limited, a registered supplier in the State of Kerala (b) Babu Cones, a proprietorship concern of Rajasthan, which was not registered under GST 3,00,000 1,00,000 Note: (i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively. (ii) All the amounts given above are exclusive of taxes. (iii) All the conditions necessary for availing the ITC have been fulfilled. (iv) There was no opening balance of any input tax credit. (v) The turnover of M/s Cute & Co was 2 crore in the previous financial year. Compute the net GST payable in cash, by M/s Cute & Co. for the month of October, 2023. Correct legal provisions should form part of your answer.

Suggested Answer and Working Notes:

Computation of net GST payable in cash Particulars CGST @ 9% (₹) SGST @ 9% (₹) IGST @ 18% (₹) Output tax liability [Refer Working Note 1] 31,500 31,500 54,000 Less: ITC available [Refer Working Note 2] 2,250 2,250 — Net GST payable 29,250 29,250 54,000 Add: Tax Payable under reverse charge to be paid in cash [The amount available in the electronic credit ledger may be used for making any payment towards output tax. Further, output tax means the tax chargeable on taxable supply of goods and/or services but excludes tax payable on reverse charge basis. Thus, tax liability under reverse charge has to be paid in cash] 2,250 2,250 Total GST Payable in cash 31,500 31,500 54,000 Working Notes 1. Computation of total value of taxable supplies made by M/s Cute & Co. for the month of October, 2023 Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹) Taxable under Forward Charge Intra-State taxable supply of DSA service [Since DSA services are provided by partnership firm, so taxable under forward charge] 2,50,000 22,500 22,500 Information Technology services [Import of services from a non-related person without consideration, in the course or furtherance of business is not a supply.] Nil Training and performance appraisal services to ABC Private Limited [Taxable; the place of supply of services in relation to training and performance appraisal to a registered person, shall be the location of such person. Thus, place of supply is Kerala and hence an inter-State transaction.] 3,00,000 54,000 Training and performance appraisal services to Babu Cones. [Taxable, the place of supply of services in relation to training and performance appraisal to an unregistered person, shall be the location where the services are actually performed. Thus, place of supply is Bengaluru, hence Intra-State transaction] 1,00,000 9,000 9,000 31,500 31,500 54,000 Taxable under Reverse Charge Rent paid for residential unit [Service by way of renting of residential dwelling to a registered person is taxable under reverse charge mechanism] 25,000 2,250 2,250 33,750 33,750 54,000 2. Computation of ITC that can be availed by M/s Cute & Co. for the month of October, 2023 Particulars CGST (₹) SGST (₹) IGST (₹) Rent paid to residential dwelling for providing DSA services [ITC is available as services are used in the course or furtherance of business.] 2,250 2,250 Purchase of car [Blocked credit in terms of section 17(5) of the CGST Act, 2017] Nil Total ITC 2,250 2,250 -

Topics: Paper 3B: Goods and Services Tax

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