Ajay, a registered person, provided the following details about transactions entered into by him in the month of July, 2024: (i) He sold 3,000 units…

CA Intermediate · Taxation · PYQS · May 2025
Ajay, a registered person, provided the following details about transactions entered into by him in the month of July, 2024: (i) He sold 3,000 units of goods to Wellness Pharma @400 each. Under section 206C(1H) of Income Tax Act, 1961, he is required to collect tax (TCS) of 2,000 from Wellness Pharma. He included - 2,000 as TCS in tax invoice issued to the party. (ii) Under a contract with State Government, he sold 1,000 units of goods (unit price is 400 per unit) @200 per unit to families of Economic Weaker Section (identified by State Government). Balance 200 per unit will be paid to him by State Government as subsidy. (iii) Issued credit notes worth - 1,50,000 net of GST as discount to its registered dealers who purchased more than 5,000 units between October, 2023 to December, 2023 under Festival Bonanza Scheme declared on 01.10.2023. The above discount was provided invoice wise with a condition of reversal of ITC by registered dealer. (iv) Sold goods to Old Age Home for consideration of 1,00,000 (Normal Sale Value is 2,00,000). SAMVEDNA, an NGO registered under Section 12AA of Income Tax Act, 1961 gave them a subsidy of 30,000 to acknowledge his services to elderly people living in old age home. (v) After analysis of sale report of first quarter, he decided to give discount of 1% to shopkeepers whose total purchases exceeds - 25,00,000 during the quarter ending June, 2024. Total discount given to such shopkeepers is 1,30,000. Compute the taxable value of supply for the month of July, 2024 on which Mr. Ajay shall pay GST. Suitable notes and assumptions should form part of your answer. All the amounts stated above are exclusive of GST.

Suggested Answer and Working Notes:

Computation of taxable value of supply on which GST shall be paid by Mr. Ajay for July 2024: Particulars Amount (₹) Goods sold to Wellness Pharma [3,000 units × ₹ 400] [TCS collected under the Income Tax Act, 1961 is not includible as it is an interim levy / not having the character of tax.] 12,00,000 Goods sold to Economic Weaker Section families [1,000 units × ₹ 200] [Subsidy given by the State Government is not includible in the value of supply.] 2,00,000 Credit note issued [Post supply discount is allowed as deduction from the value of supply if (i) it is agreed at the time of supply, (ii) proportionate ITC is reversed by the recipient, and (iii) it is specifically linked to relevant invoices.] (1,50,000) Sold goods to old age home [Transaction value is the value of supply. Subsidy received from a non-Governmental organisation is includible in the value only if it is directly linked to the price of the goods. Thus, subsidy received from the NGO-SAMVEDNA is not includible in the value since it is blanket subsidy and not directly linked to the price of the goods] 1,00,000 Discount given to shopkeepers [Post supply discount is not allowed as deduction from the value of supply since in the given case, the same is not agreed at the time of supply.] -- Value of taxable supply on which GST is to be paid by Mr. Ajay 13,50,000

Topics: Paper 3B: Goods and Services Tax

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