M/s. ABC & Co., a chartered accountancy firm, has its office in Bengaluru. It is registered under GST in the State of Karnataka. In the month of…

CA Intermediate · Taxation · MTP · September 2024
M/s. ABC & Co., a chartered accountancy firm, has its office in Bengaluru. It is registered under GST in the State of Karnataka. In the month of April, it supplied statutory audit services to Dhruv Manufacturers of Karnataka for 1,20,000. Further, it charged - 1,60,000 for the ITR filing services provided to the recipients located within Karnataka in said month. It also received - 1,80,000 for internal audit services provided to a client registered in Mumbai, Maharashtra. All the amounts are exclusive of GST. M/s. ABC & Co. has also provided following information regarding the expenses incurred in the month of April for the purpose of providing the taxable services: Sr. No. Particulars CGST (₹) SGST (₹) 1. Membership fee of a club (located in Bengaluru) paid for a senior partner of the firm 2,000 2,000 2. Rent paid to landlord, who is registered in State of Karnataka, for office located in Karnataka (Refer Note below) 3,850 3,850 3. Professional fee paid to Mr. Jamnaprasad, a practicing Chartered Accountant, for professional services availed [TDS of 20,000 is deducted under section 194J of the Income-tax Act, 1961] 18,000 18,000 4. Air conditioner purchased for office purpose 3,000 3,000 Note - Landlord did not upload his GSTR-1 within the prescribed time resulting in the GST amount not being reflected in GSTR-2B of M/s. ABC & Co. Other suppliers have duly uploaded their GSTR-1 within the prescribed time and GST amount is reflected in GSTR-2B of M/s. ABC & Co. Compute the net GST payable in cash by M/s. ABC & Co. for the month of April. Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively assuming that all the remaining conditions of utilisation of ITC are fulfilled.

Suggested Answer and Working Notes:

Computation of net GST payable by ABC & Co. for the month of April Particulars Value of supply CGST (₹) SGST (₹) IGST (₹) Intra-State statutory audit services 1,20,000 10,800 10,800 Intra-State ITR filing services 1,60,000 14,400 14,400 Inter-State internal audit services since place of supply is location of recipient, i.e. Mumbai, Maharashtra 1,80,000 - - 32,400 Total output tax liability 25,200 25,200 32,400 Less: ITC [Refer Working Note] [CGST credit is set off against CGST liability and SGST credit is set off against SGST liability since CGST credit cannot be utilized towards payment of SGST liability and vice versa.] (21,000) (21,000) Net GST payable 4,200 4,200 32,400 Working Note: Computation of ITC that can be availed Particulars CGST (₹) SGST (₹) Computation of eligible ITC Membership fee paid [ITC on membership of a club is blocked except when such services are provided by an employer to its employees under a statutory obligation.] Nil Nil Office rent paid to landlord [No ITC since the supplier did not upload the details of invoice in his GSTR-1 and said details are not being reflected in GSTR-2B of the recipient.] Nil Nil Professional fee paid [ITC on services used in the course/furtherance of the business is allowed.] 18,000 18,000 Air conditioner for office purpose [ITC on goods used in the course/furtherance of the business is allowed.] 3,000 3,000 Total eligible ITC 21,000 21,000

Topics: Paper 3B: Goods and Services Tax

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