CA Intermediate Taxation November 2022 Suggested Answers
CA Intermediate Taxation November 2022 Suggested Answers
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CA Intermediate
Taxation
November 2022
Suggested Answers
Q. Answers Marks
No.
1. i) 14
Computation of total income of Mr. Rohan for the A.Y. 2022-23
Particulars ₹ ₹
I) Income from house property
Net annual value u/s 23(2) Nil
(-) Standard deduction @30% u/s 24 (a) --
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(-) Interest on loan u/s 24(b) (30,000)
(taken for repairs to property is ₹40,000, but
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restricted to ₹30,000 (maximum limit)
Loss from house property (30,000)
s.
Set off against the income under PGBP head 30,000 Nil
II) Income from PGBP
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Income:
1) Fess from visit to other hospital 6,50,000
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100
Gross value (₹5,85,000 × ) as TDS
90
deducted @ 10% u/s 194J)
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Expenditure:
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15%) (d)
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Total amount of depreciation (a+ b + c + d) 70,200
Total Expenditure (B) 10,16,200 10,16,200
s.
Net profit under profit & gain from business 7,43,800 7,43,800
profession (A – B)
(-) Loss from house property te 30,000
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7,13,800
III) Income from other sources
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90
ii) Gift from relative of patient -
as
100
Gross amount (22,500 × 90
)
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@ 10% u/s 194J
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Tax Refund Due 37,090
ii)
s.
If he opts for Sec. 44ADA then minimum income from business and profession is
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= Gross receipt × 50% (without providing deduction u/s 30-38)
= Gross receipt includes (grossed up value of fees from visit to the hospital, fees for
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March, 2021 received in April and fees received during the year
100
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= ₹8,80,000
Computation of Tax payable
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As this income is higher than income computed above under the PGBP head i.e.,
₹8,80,000 > ₹7,43,800 therefore, it is not beneficial for assessee to opt for Sec. 44ADA.
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Dubai but NOR Resident Resident
--- --- ---
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Not taxable Not taxable Not taxable
since the (since the (since the
s.
income has income has income has
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accrued or accrued or
arise outside arise outside
accrued or
arise outside
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India & India & India &
assuming assuming assuming
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II)
In 2nd case, as his Indian income excluding the foreign income during the previous year
does not exceed ₹15 lakh (i.e., ₹ 5,00,000+₹ 8,00,000+₹ 2,00,000=₹ 15,00,000) so
section 6(1A) does not apply here therefore Assessee will be a non-resident.
Computation is shown in the above table.
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III)
If Mr. Sarthak born in Dubai and his parents were born in India in that case, he becomes
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the person of Indian origin therefore the conditions of deemed to be resident as per
section 6(1A) does not apply here as this section is applicable only on Indian citizen.
s.
Hence, his residential status would be non-resident and his total income would also be
b) I)
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computed accordingly. Computation is shown in the above table.
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Computation Taxable Salary of Mr. B for A.Y. 2022-23
Particulars ₹
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= 2% of ₹14,36,400
= ₹28,728
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5) Travelling allowance of (₹ 5,000 × 12) i.e., ₹ 60,000 received by employee would
be exempt here since full amount was used for official use (duty tour).
s.
6) Research & Training allowance of (₹ 30,000 × 12) i.e., ₹ 36,000 is also exempt here
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under section 10(14). Since full amount of allowance was used for official purpose.
7) Children education allowance is exempt upto ₹100 per month per child maximum
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for 2 children
Here, taxable allowance = [(₹600 × 12 × 3) – (₹100 × 12 × 2)]
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= [₹21,600 – ₹2,400]
= ₹19,200
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8) The amount of ₹15,000 reimbursed by the employer for his treatment in private
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₹12,500 paid by the employer for insuring health of Mr. B is fully exempt here in
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11) When the accommodation is owned by the employer, the taxable value of rent-free
accommodation provided to an employee would be 7.5% or 10% or 15% of salary
based on population of city where accommodation is provided.
Here, the accommodation is provided in Hyderabad therefore 15% of salary would
be applicable in this case.
valuation of salary, for the purpose of Rent-free accommodation includes:
a) Basic salary – ₹10,26,000
b) Dearness allowance –₹ 4,10,400
c) Bonus – ₹87,000
d) Children education allowance – ₹19,200
e) Medical allowance =₹ 18,000
Thus, Salary is ₹ 15,60,600
Taxable value of Rent-free Accommodation:
Working Note
1) The exemption for research & training allowance, children education allowance as
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well as for standard deduction cannot be claimed under section 115BAC. Hence,
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these things have to be added back in order to compute the taxable salary under
this provision.
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2) Since no exemption is to be provided for research & training allowance and
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children education allowance under Section 115BAC therefore these allowance
will be fully taxable and accordingly the amount of salary taken for computing the
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taxable value of rent-free accommodation will also be changed.it has to be
increases by ₹38,400 (includes, ₹3,600 of research & training allowance and
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increase by ₹5,760 and has to be added for computing the taxable salary of Mr. B.
for the A.Y. 2022-23.
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3. i) Section 194J provides for deduction of tax at source @ 10% from any sum paid by 6
way of any remuneration or fees or commission, by whatever name called, to a
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resident director, which is not the nature of salary which tax is deductible under
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section 192. The threshold limit of ₹ 30,000 up to which the provisions of tax
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deduction at source are not attracted in respect of every other payment covered
under section 194J is, however, not applicable in respect of sum paid to a director.
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Therefore, according to the above provision S & Co. will deduct TDS on 02-02-2022.
ii) As per section 194LA, any person responsible for payment to a resident, any sum in
the nature of compensation or consideration on account of compulsory acquisition
under any law, of any immovable property, is required to deduct tax at source, if
such payment or the aggregate amount of such payments to the resident during the
financial year exceeds ₹ 2,50,000.
In the given case, there is no liability to deduct tax at source as the payment made to
Mr. Mohan does not exceed ₹ 2,50,000.
No tax is to be deducted u/s 194Q on the payments made on 10.6.2021, since the
aggregate payments till that date i.e., ₹ 25 lakhs, has not exceeded the threshold of ₹ 50
lakhs.
Tax of ₹ 200 (i.e., 0.1% of ₹ 2 lakhs) has to be deducted under section 194Q from the
payment/credit of ₹ 27 lakh on 20.08.2021 [₹ 27 lakh – ₹ 25 lakhs, being the balance
unexhausted threshold limit].
Tax of ₹ 2,800 (i.e., 0.1% of ₹ 28 lakhs) has to be deducted u/s 194Q from the payment/
credit of ₹ 28 lakhs on 12.10.2021.
Note – In this case, since both section 194Q and 206C(1H) applies, tax has to be
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deducted u/s 194Q.
b) Computation of gross total income of Mr. Prakhar for A.Y. 2022-23 4
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Particulars ₹ ₹
1) Income from House Property 3,60,000 3,60,000
s.
2) Capital Gain
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Long-term capital gain on sale of agricultural
land (assumed that this is an urban agricultural
6,000
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land)
Less: Set off short-term capital loss on shares (6,000) Nil
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of a company
Balance short-term capital loss of ₹12,700 (i.e.,
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to a business income)
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Note:
1) Out of ₹80,000 income from rubber business 65% is agricultural income and
remaining 35% is business income. Since, agricultural income is not taxable in
India under section 10(1) therefore only 35% of the total income that is belongs to
business income would be taxable here i.e. (₹ 80,000 × 35%) = ₹ 28,000.
2) As per section 72(3) business loss can be carried forward for a maximum of eight
assessment years immediately succeeding the assessment year for which the loss
was first computed. Since the eight-year period for carry forward of business loss
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of A.Y.2020-21 expired in the A.Y. 2028-29, the balance unabsorbed business loss
of ₹ 42,000 can be carried forward A.Y. 2023-24.
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3) Short-term capital loss on shares of a company can be set off against long-term
capital gain income from the sale of urban agriculture land and the balance loss can
s.
be carried forward for set off against the capital gain income of the subsequent
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assessment year. Such loss can be carried forward for a maximum period of 8
assessment years.
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4) Neither the loss from betting can be set-off against the income from the other heads
nor carried forward.
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c) i) Under section 234H, where a person, who is required to intimate his Aadhar 4
Number under section 139AA(2), fails to do so on or before the notified date i.e.,
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31st March, 2022, he would be liable to pay such fee, as may be prescribed, at the
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time of making intimation under section 139AA(2) after 31st March, 2022.
However, such fee shall not exceed ₹1,000.
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Accordingly, if such person fails to do so by the date notified in section 139AA(2) i.e.,
31st March, 2022, then, at the time of subsequent intimation of his Aadhaar number to
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the prescribed authority, such person would be liable to pay, by way of fee, an amount
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equal to,—
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a) ₹ 500, in a case where such intimation is made within three months from the
date referred in section 139AA(2) i.e., by 30.06.2022; and
b) ₹ 1,000, in all other cases.
ii) In case of failure to intimate the Aadhaar Number by 31.03.2022, the PAN allotted
to the person would be made inoperative. Further, Rule 114AAA provides that if
PAN of a person has become inoperative, he will not be able to furnish, intimate or
quote his PAN and would be liable to all the consequences under the Act for such
failure. This will have a number of implications such as:-
i) The person would not be able to file return using the inoperative PAN
ii) Pending returns will not be processed
iii) Pending refunds cannot be issued to inoperative PANs
iv) Pending proceedings as in the case of defective returns cannot be
completed once the PAN is inoperative
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4. i) Computation of taxable amount of interest 6
a) i) Interest on interest compensation received ₹3,00,000
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Less: 50% deduction allowed u/s 57 (-)1,50,000
Taxable amount 1,50,000
s.
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Interest on enhanced compensation is chargeable to tax under the head income from
other sources in the year of receipt, after providing for deduction of 50% of such
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income under section 57. Accordingly, ₹1,50,000 (₹3,00,000 – ₹1,50,000, being 50% of
₹3,00,000) would be chargeable to tax in the hands of assessee and 40% of earned
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ii)
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As per section 50 CA, if the consideration received or accruing as a result of the transfer
by an assessee of a capital asset, being share of a company other than a quoted share,
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is less than the fair market value of such shares the full value of consideration shall be
the fair market value of those asset. In this case, the capital gain chargeable in the hands
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Here the sale consideration is less than the fair market value of shares, so the transferor
Mr. Narayan will be taxed under section 50 CA as he has not declared true
considerations. Meanwhile, the transferee (AB Pvt. Ltd.) will be taxed under section
56(2)(x) due to understating the purchase consideration. Hence there is double
taxation. Therefore, tax will also be computed in the hands of AB Pvt. Ltd. section
56(2)(x) shall be attracted and ₹1,00,000 shall be taxed as income from other sources
in the hands of AB Pvt. Ltd. according to section 49(4). AB Pvt. Ltd. acquisition cost shall
be ₹3,00,000.
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Since the return has filed on time interest under section 234A is not applicable in that
case.
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Computation of tax liability of Mr Priya (senior citizen)
Income Tax rate Tax liability (₹)
s.
Up to ₹3,00,000 Nil Nil
3,00,001 to 5,00,000
5,00,000 to 10,00,000
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5%
20%
10,000
50,000
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(2,50,000 × 20%)
60,000
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Instalment
15-06-22 15% of ₹ 62,400 = 9,360 – 0 9,360 × 1% × 3 months = 279
15-09-22 45% of ₹ 62,400 = 28,080 – 0 28,080 × 1% × 3 months =
840
15-12-22 75% of ₹ 62,400 = 46,800 – 36,800 × 1% × 3 months =
10,000 1,104
15-03-23 100% of ₹ 62,400 = 62,400 – 52,400 × 1% × 1 month =524
10,000
Total Interest 2,747
According to the above provision assessing officer has the power to charge the income
of previous year in the same previous year and not in the assessment year and notice
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served by the assessing officer is according to the law.
OR 4
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Computation of total income of Mr. Raman & his wife for A.Y. 2022-23
Mr. Raman Mrs. Savita
s.
Income under the head salary of (Mrs. Savita) 3,00,000
(W.N.1)
Less: Standard deduction u/s 16 (ia)
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2,50,000
Income under the head PGBP (W.N.2) 2,00,000 1,00,000
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5,500
Total taxable income 2,30,000 3,55,500
Working Notes:
1) As per section 64(1) in case the spouse of the individual receives any amount by
way of income from any concern in which the individual has substantial interest
(i.e., holding shares at least 20% of voting power or entitled to at least 20% of the
profit of the concern). Hence, such income shall be included in the total income of
the individual. The only exception is in a case where the spouse possesses any
technical or professional qualification and the income earned is solely attributable
to the application of her technical or professional knowledge. In this case, the
annual salary of ₹3,00,000 received by Mrs. Savita from ABC Pvt ltd will be taxable
Here, Mr. Raman received ₹4,00,000 as a cash gift from his wife Savita, which
covers under the definition of relative therefore the income generated out of the
investment of such amount would not be taxable in the hand of transferee (Mr.
Raman)
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apportioned in the ratio of 2:1(8,00,000:4,00,000).
3) As per Sec. 60, in case there is a transfer of income without transfer of asset from
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which such income is derived, such income shall be treated as income of the
transferor. Therefore, the fixed deposit interest of ₹30,000 transferred by Mr.
s.
Raman to his brother’s son shall be taxable in the hands of Mr. Raman
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4) In case the income earned by minor child is on account of any activity involving
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application of any skill or talent then such income of the minor child shall not be
included in the income of the parent, but shall be taxable in the hands of the minor
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child. Therefore, the income of ₹10,000 (received a cash award) shall be taxable in
his hands only.
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As per section 64 (1A), the income of the minor child is to be included in the total
income of the parents whose total income (excluding the income of minor child to
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₹1,500 per child. Therefore, the interest income of ₹7,000 on balance maintained
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in the saving bank account after providing exemption of ₹1,500 u/s 10(32) be
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included in the income of Mrs. Savita. Since, Mrs. Savita income of ₹3,50,000
(before including the income of a minor child, is greater than Mr. Raman’s income
of ₹2,30,000. Therefore, 5,500 (7,000 – 1,500) shall be included in Mrs. Savita
income.
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b) Computation of Input Tax Credit
Particulars CGST (₹) SGST (₹) IGST (₹)
s.
Intra- state inward supplies 45,000 45,000 -
(6,50,000-1,50,000) x 9%
(Working note iii)
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Inward supplies of renting cars - - -
(Working note iv)
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- - 93,600
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d) Working Notes:
As per the provisions of CGST Act 2017:
i) Supplies provided to the State Government of Karnataka would not be exempted as
the total expenditure borne by the State Government is less than 75% of the total
expenditure incurred.
It is also assumed that the expenditure of ₹63,000 incurred by the State
Government is already included in the value of supply of ₹5,00,000.
ii) As per section 7 and schedule I of CGST Act 2017, stock transfer without
consideration between distinct persons becomes supply.
iii) Input tax credit for 6 invoices amounting to ₹1,50,000 would not be available as
they are invalid tax invoices.
As per section 16(2) of CGST Act 2017, the registered person should be in
possession of a valid tax invoice. Any e-invoice without an IRN is invalid.
iv) It is blocked credit under section 17(5) of CGST Act 2017.
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Computation of eligible ITC for the month of March 2022
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Particulars CGST (₹) SGST (₹) IGST (₹)
Goods received from Charm Ltd. - - 36,000
s.
(2,00,000×18%)
(Working note i)
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Received training from Charm Ltd. - - -
free of cost. (Working note ii)
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Working notes:
As per CGST Act 2017:
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person. Accordingly, supply of training free of cost would not become supply.
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b) 4
Ans. i) As per the provisions of CGST Act, 2017, following persons are not eligible to
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Therefore, in the given case, Dharun is exclusively engaged in providing services that
are wholly exempt from tax would be exempted from the requirement of registration
under GST.
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State/Union territory from where he makes a taxable supply of goods and/or services,
if his aggregate turnover in a financial year exceeds the threshold limit. The threshold
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limit for a person making exclusive intra-State taxable supplies of goods is as under: -
a) ₹ 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
s.
b) ₹ 20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry,
Sikkim, Telangana and Uttarakhand.
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c) ₹ 40 lakh for rest of India. However, the higher threshold limit of ₹ 40 lakh is not
available to persons engaged in making supplies of ice cream and other edible ice,
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whether or not containing cocoa, Pan masala and Tobacco and manufactured
tobacco substitutes.
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The threshold limit for a person making exclusive taxable supply of services or supply
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As per section 2(6) of CGST Act 2017, aggregate turnover includes the aggregate value
of:
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i) all taxable supplies, (excluding the value of inward supplies on which tax is
payable under reverse charge basis.)
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As per section 24 of CGST Act 2017, persons who are required to pay tax under reverse
charge shall be mandatorily required to take registration under GST irrespective of
aggregate turnover.
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Accordingly, the consignment value of M/s Sakura Enterprises would be as follows:
Particulars Amount (₹)
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Value of taxable goods 47,500
Value of exempt goods Nil
s.
Total 47,500
IGST @ 6%
Total Consignment value te 2,850
50,350
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Since the consignment value exceeds the threshold limit of ₹50,000, therefore, M/s
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Sakura Enterprises is liable to generate e way bill for the above supply of goods.
8. a) 5
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As per the provisions of CGST Act 2017, restrictions have been imposed on the use of
amount available in electronic credit ledger vide rule 86B of the CGST Rules, 2017. Yes,
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there are exceptions to rule 86B. The exceptions to rule 86B are as under:
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of more than ₹ 1 lakh as income tax under the Income-tax Act, 1961 in each of the last
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2 financial years for which the time limit to file return of income under section 139(1)
of the said Act has expired
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the said restriction after such verifications and such safeguards as he may deem fit.
b) 5
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As per the provisions of CGST Act 2017:
Following situations warrant (Requires) issue of credit note:
s.
i) The supplier has erroneously declared a value that is more than the actual value of
goods or services provides.
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ii) The supplier has erroneously declared a higher tax rate than what is applicable for
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the kind of goods or services or both supplied.
iii) The quantity received by the recipient is less than what has been declared in the
tax invoice or the goods supplied are returned by the recipient.
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In the return for the month during which such credit note has been issued but not later
that:
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a) September following the end of the financial year in which the supply was made
Or
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Details of outward supplies required to be furnished in IFF: In the IFF, the taxpayer
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has to submit the B2B (business to business) invoice details of both inter-State and
intra-State supply transactions along with debit and credit notes of the B2B invoices
issued during the month. The details of outward supplies furnished using IFF shall
include the –
a) invoice wise details of inter-State and intra-State supplies made to the registered
persons;
b) debit and credit notes, if any, issued during the month for such invoices issued
previously.
However, if a registered person does not opt to upload invoices using IFF, then he has
to upload invoice details for all the 3 months of the quarter in Form GSTR-1.
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