Nootan Ltd., a registered person in Indore, Madhya Pradesh, provides details of the following transactions carried out during the month of June…

CA Intermediate · Taxation · PYQS · January 2025
Nootan Ltd., a registered person in Indore, Madhya Pradesh, provides details of the following transactions carried out during the month of June 2024: Sr. No. Particulars Amount in ₹ 1. Paid remuneration to Mr. Madan, for the services rendered by him in the capacity of Director. Company deducted TDS under section 192 (Salary) and 194J (Professional or Technical services) of Income-Tax Act, 1961. Gross payments made were - 8,50,000 and - 11,50,000 respectively for Salary and Professional services. (Intra-State supply) 20,00,000 2. Paid rent to Indian Railways, registered in Madhya Pradesh, for its property located in the same State, which was taken on lease by the company. 1,25,000 3. Paid to XYZ Security Private Limited, for providing security services to its warehouses across the State. Security agency is not registered under GST. 5,35,000 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.

Suggested Answer and Working Notes:

Computation of GST Payable by Nootan Limited under reverse charge S. No. Particulars CGST (₹) SGST (₹) 1. Remuneration paid to Mr. Madan [₹ 11,50,000 × 9%] [(i) Remuneration paid to director for professional services subjected to TDS under section 194J of the Income-tax Act is outside the scope of Schedule III of the CGST Act, 2017 and tax is payable under reverse charge by the recipient company – Nootan Ltd. (ii) However, salary of 8,50,000 paid to director subjected to TDS under section 192 of the Income-tax Act is not taxable since services provided by an employee to employer in course of or in relation to his employment are outside the scope of supply in terms of Schedule III of the CGST Act, 2017. Thus, the same is neither supply of goods nor supply of services] 1,03,500 1,03,500 2. Paid rent to Indian Railways [Tax on renting of immovable property services provided by Indian Railways is not payable under reverse charge.] Nil Nil 3. Security services received [Tax on security services is not payable under reverse charge since supplier is a body corporate.] Nil Nil 4. Paid fee to Local Municipal Corporation [Not taxable/Exempt since the consideration for the services provided by local authority does not exceed - 5,000.] Nil Nil Total GST payable by Nootan Ltd. under reverse charge 1,03,500 1,03,500

Topics: Paper 3B: Goods and Services Tax

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