1

CA Jasmeet Singh Arora

RTP Jan 2025

Case Scenario [Income Tax]
Sagar LLP is an LLP unit set up in Special Economic Zone (SEZ) in the financial year 2019-
20 for manufacture of textiles. The unit fulfils all the conditions under section 10AA of
the Income-tax Act, 1961. The details of this unit for the financial year 2024-25 are given:
Particulars ₹
Profits of unit located in SEZ 58,00,000
Export sales of above unit received in India in convertible foreign 1,00,00,000
exchange on or before 30.9.2025
Domestic sales of above unit 60,00,000
Sagar LLP has three partners, Mr. Ram, Mr. Shyam and Mr. Ganesh. Mr. Ram and Mr.
Shyam are working partners while Mr. Ganesh is a non-working partner. All the three
partners are receiving remuneration of ₹ 1 lakh per month from the LLP which is
already debited to the profits and loss account of the LLP.
Apart from this, Mr. Ganesh was employed in XYZ Ltd. till 30.9.2024 and having a salary
of ₹ 80,000 per month. He resigned then and decided to start his own business. He set
up a warehousing facility in Pune for storage of agricultural produce, fulfilling the
conditions for claim of deduction under section 35AD. Capital expenditure in respect of
warehouse amounted to ₹ 90 lakhs (including cost of land ₹ 30 lakhs) was incurred
during the P.Y. 2024-25. The warehouse became operational with effect from 1st
December 2024. The profit from operation of warehousing facility (before considering
deduction under section 35AD) during the F.Y. 2024-25 is ₹ 1,10,00,000.
He pays lumpsum premium of ₹ 90,000 towards health insurance for self and his wife
(age 43 years) for 36 months on 01.10.2023 by account payee cheque. He also
contributes ₹ 1,50,000 towards PPF.
From the information given above, choose the most appropriate answer to the
following questions –

MCQ 01
What is the amount of remuneration allowable as deduction to the LLP for A.Y.2025-26
under the head “Profits and gains of business or profession”?
a) ₹ 36.00 lakhs
b) ₹ 57.30 lakhs
c) ₹ 35.70 lakhs
d) ₹ 24.00 lakhs

Solution
Computation of allowable remuneration
Particulars Rs.
Profit of SEZ Unit 58,00,000
Add: Remuneration [1,00,000 x 3 x 12] 36,00,000
Book Profit 94,00,000
Maximum allowable remuneration
First 6,00,000 = 90% of Rs. 6,00,000 = 5,40,000
Balance 88,00,000 = 60% of 88,00,000 = 52,80,000 58,20,000
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CA Jasmeet Singh Arora

Remuneration allowable to working Partner [1,00,000 x 12 x 2] 24,00,000

MCQ 02
What is the amount of deduction available under section 10AA to Sagar LLP and under
section 35AD to Mr. Ganesh while computing income under the regular provisions of
the Income-tax Act, 1961 for A.Y.2025-26?
a) ₹ 36.25 lakhs and ₹ 60 lakhs, respectively
b) ₹ 21.875 lakhs and ₹ 60 lakhs, respectively
c) ₹ 18.125 lakhs and ₹ 60 lakhs, respectively
d) ₹ 21.875 lakhs and ₹ 90 lakhs, respectively

Solution
Computation of deduction u/s 10AA
Particulars Rs.
Book Profit 94,00,000
Less: Remuneration Paid 24,00,000
Profit of SEZ unit 70,00,000
Deduction u/s 10AA [70,00,000 x 1,00,00,000 / 1,60,00,000 x 50%] 21,87,500

MCQ 03
What is the total income of Mr. Ganesh under the regular provisions of the Income-tax
Act, 1961 for A.Y.2025-26?
a) ₹ 52,57,500
b) ₹ 52,55,000
c) ₹ 53,05,000
d) ₹ 64,55,000

Solution
Computation of Total Income
Particulars Rs.
Income under head salary
Salary income [80,000 x 6] 4,80,000
Less: standard deduction 50,000 4,30,000

Income under head PGBP

Profit from operation of warehouse 1,10,00,000
Less: Capital Expenditure [90,00,000 – 30,00,000] 60,00,000
50,00,000

Gross Total Income 54,30,000

Less: Deduction u/s 80D [90,000 / 4] 22,500
Less: Deduction u/s 80C 1,50,000
Total Income 52,57,500

MCQ 04
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CA Jasmeet Singh Arora

What is the tax liability (rounded off) of Mr. Ganesh under default tax regime under
section 115BAC for A.Y.2025-26?
a) ₹ 37,42,280
b) ₹ 40,18,560
c) ₹ 36,22,680
d) ₹ 40,65,200

Solution
Computation of Tax Liability
Particulars Rs.
Gross Total Income 54,30,000
Add: Deduction u/s 35AD 60,00,000
Less: Depreciation [60,00,000 x 10% x 1/2] 3,00,000
1,11,30,000
Tax on First 15,00,000 1,40,000
Tax on Balance 96,30,000 x 30% 28,89,000
30,29,000
Add: Surcharge @15% 4,54,350
34,83,350
Add: 4% HEC 1,39,334
36,22,680

MCQ 05
What is the tax liability (rounded off) of Mr. Ganesh if he has opted out of the default
tax regime for A.Y.2025-26?
a) ₹ 15,89,870
b) ₹ 24,24,460
c) ₹ 15,89,020
d) ₹ 24,90,280

Solution
Computation of Tax Liability
Particulars Rs.
Tax on Normal income of 10,00,000 1,12,500
Tax on balance income of 42,57,500 x 30% 12,77,250
13,89,750
Add: Surcharge @10% 1,38,975
15,28,725
Add: 4% HEC 61,149
15,89,870

Illustration 01
Mr. Ramesh is an authorized wholesale distributor of fertilizers and other agricultural
products. An analysis of his trading and profit & loss account for the previous year
31.3.2025 revealed the following information:
1. Net Profit ₹ 75,43,000.
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CA Jasmeet Singh Arora

2. The following incomes were credited in the profit and loss account
a) Rent received ₹ 5,40,000
b) Income-tax refund ₹ 15,000
c) Dividend from Indian companies ₹ 2,50,000 (Gross)
3. Rates and taxes debited to profit and loss account include ₹ 1,000 paid towards late
filing of his IT return for A.Y. 2024-25 under section 234F of Income-tax Act.
4. Salaries debited to profit and loss account include ₹ 35,000 paid on single day by
way of cash to his accountant.
5. Interest of ₹ 1,20,000 paid on loan of ₹ 10,00,000 taken from NBFC. Out of the loan,
amount of ₹ 2 lakhs was used for personal purposes and the balance was used for
business purposes. No TDS was deducted while paying interest. Interest of ₹
1,20,000 is debited to profit and loss account.
6. Municipal Taxes of ₹ 10,000 paid for the building was debited to profit and loss
account.
Additional Information
1. Closing stock was undervalued by ₹ 40,000
2. Income-tax refund includes ₹ 2,000 towards interest.
3. An amount of ₹ 45,000 was paid by cheque during the year towards health
insurance policy covering himself, his spouse and his children.
4. Advance Tax paid during the year is ₹ 15 lakhs.
5. Half of the building is used for business purpose and remaining half let out to Mr.
Anshul for residential purpose.
6. He also sold his vacant land on 10.07.2024 for ₹ 10 lakhs. The stamp duty value of
land at the time of transfer was ₹ 14 lakhs. The FMV and stamp duty value of the
land as on 1st April, 2001 was ₹ 4 lakhs and ₹ 3 lakhs, respectively. This land was
acquired by him on 05.08.1995 for ₹ 1.80 lakhs. He had incurred registration
expenses of ₹ 10,000 at that time. The cost of inflation index for the years 2024-25
and 2001-02 are 363 and 100, respectively.
7. Mr. Ramesh’s turnover for the P.Y. 2023-24 was ₹ 3 crores
You are required to compute the total income and tax payable by Mr. Ramesh for the
A.Y. 2025-26 under regular provisions of the Act.

Solution
Computation of total income of Mr. Ramesh for A.Y. 2025-26
under normal provisions of the Act
Particulars Amount Amount
Income from house property
Rent received (Rent received has been taken as gross 5,40,000
annual value, due to absence of information relating to
expected rent)
Less: Municipal tax paid by Ramesh (₹ 10,000 x ½) 5,000
Net Annual Value 5,35,000
Less: Deduction u/s 24(a) – 30% of NAV 1,60,500
PGBP
Net profit as per profit and loss account 75,43,000 3,74,500
Add: Expenses/Payments debited to profit and loss
account but not allowed
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CA Jasmeet Singh Arora

Fee for late filing of income-tax return for A.Y. 2024-25 – 1,000
disallowed
Salary paid to an accountant in cash exceeding ₹ 10,000 35,000
– disallowed under section 40A(3)
Interest paid to NBFC on loan which is used for personal 24,000
purposes (₹ 1,20,000 x 2,00,000/10,00,000) – not
allowed as per section 37
Interest paid to NBFC on which tax is not deducted 28,800
attracts disallowance @30% of ₹ 96,000 under section
40(a)(ia) [Since Mr. Ramesh’s turnover for the
immediately preceding previous year i.e., P.Y. 2023-24
exceeds ₹ 1 crore, he is required to deduct tax at source.
Disallowance @30% of interest is attracted for non-
deduction of tax at source]
Municipal taxes paid for let out portion [₹ 10,000 x ½] 5,000
76,36,800
Add: Undervaluation of Closing stock 40,000
Less: Income chargeable under other heads and income 76,76,800
not chargeable to tax but credited to profit and loss
account
1. Rent received (Taxable under the head “Income
from house property”)
2. Income-tax refund
3. Dividend received from Indian companies (Taxable 5,40,000
under the head “Income from other sources”) 15,000

Capital Gains 2,50,000

Long-term capital gains on sale of land (since held for 68,71,800
more than 24 months)
Full Value of Consideration [Higher of stamp duty value
of ₹ 14 lakhs and Actual consideration of ₹ 10 lakhs,
since stamp duty value exceeds actual consideration by
more than 10%]
Less: Indexed Cost of acquisition [₹ 3,00,000 x 363/100]
Cost of acquisition Higher of – 14,00,000
1. Actual cost ₹ 1.80 lakhs + ₹ 0.10 lakhs = ₹ 1.90 lakhs
and 10,89,000
2. Fair Market Value (FMV) ₹ 4 lakhs as on 1.4.2001
restricted to stamp duty value of ₹ 3 lakhs as on
1.4.2001 = ₹ 3 lakhs
3,11,000
Income from Other Sources
Interest on income-tax refund 2,000
Dividend from Indian companies 2,50,000 2,52,000
Gross Total Income 74,34,800
Less: Deduction under Chapter VI-A
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CA Jasmeet Singh Arora

Section 80D - Health insurance premium paid 25,000

for self, spouse and his children allowable as deduction
to the extent ₹ 25000
Total Income 74,09,800

Computation of tax payable by Mr. Ramesh for the A.Y.2025-26

Particulars Amount
Tax on ₹ 3,11,000@20% under section 112 62,200
Tax on balance income of ₹ 70,98,800
Upto ₹ 2,50,000 Nil
₹ 2,50,001 - ₹ 5,00,000 [i.e., ₹ 2,50,000 @5%] 12,500
₹ 5,00,001 - ₹ 10,00,000 [i.e., ₹ 5,00,000 @20%] 1,00,000
Above ₹ 10,00,000 [i.e., ₹ 60,98,800 @30%] 18,29,640 19,42,140
20,04,340
Add: Surcharge @10%, since total income
exceeds ₹ 50,00,000 but does not exceed ₹ 1 crore 2,00,434
22,04,774
Add: Health and Education cess@4% 88,191
Tax liability 22,92,965
Less: Advance Tax 15,00,000
Tax Payable 7,92,965
Tax Payable (Rounded off) 7,92,970

Illustration 02
Mr. Akshay (aged 59 years), an Indian citizen, travelled frequently out of India for his
business trip as well as for his outings. He left India from Delhi airport on 20th April 2024
and returned on 15th October 2024. He has been in India for less than 700 days during the
7 years immediately preceding the previous year. Determine his residential status and his
total income for the assessment year 2025-26 from the following information:
(1) Long term capital gain on sale of shares of Shama India Ltd., a listed Indian
company, amounting to ₹ 1,12,000. The sale proceeds were credited to his bank
account in UK.
(2) Dividend amounting to ₹ 40,000 (gross) received from RIL Ltd., an Indian company.
He had borrowed money from Mr. Abhay, a non- resident Indian, for the above-
mentioned investment on 2nd April, 2024. Interest on the borrowed money for the
P.Y. 2024-25 amounted to ₹ 10,000.
(3) Interest on post office saving bank account amounting to ₹ 9,500.
Mr. Akshay has shifted out of the default tax regime and wants to pay tax under normal
provisions of the Act.

Solution
Determination of residential status
An individual is said to be resident in India in any previous year, if he satisfies any one of
the following conditions:
(i) He has been in India during the previous year for a total period of 182 days or more,
or
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CA Jasmeet Singh Arora

(ii) He has been in India for at least 60 days in the previous year and has been in India
during the 4 years immediately preceding the relevant previous year for a total
period of 365 days or more.
If the individual satisfies any one of the conditions mentioned above, he is a resident. If
both the above conditions are not satisfied, the individual is a non-resident.
Mr. Akshay, an Indian citizen, has satisfied the first basic conditions for being a resident,
since he was in India for 188 days (20+17+30+31+31+28+31) during the previous year 2024-
25. Hence, he is a resident in India for A.Y.2025-26.
An individual would be resident but not ordinarily resident if he satisfies either one of
the following conditions:
(i) He has been non-resident in India in any 9 out of 10 previous years preceding the
relevant previous year, or
(ii) He has, during the 7 years immediately preceding the relevant previous year, been
in India for a period of 729 days or less.
Since Mr. Akshay has been in India for less than 700 days during the 7 years immediately
preceding the previous year, he would be a resident but not ordinarily resident for A.Y.
2025-26
Computation of total income of Mr. Akshay for A.Y.2025-26
Particulars Amount (₹)
(1) Long-term capital gain on sale of shares of an Indian listed 1,12,000
company is chargeable to tax in the hands of Mr. Akshay, since
it has accrued and arisen in India even though the sale proceeds
were credited to bank account in UK.
(2) Dividend received from an India company taxable in the hands
of the Akshay as Income from other sources since the income
has accrued or arisen in India 40,000
Less: Interest expenditure restricted to 8,000 32,000
20% of dividend
(3) Interest on post office saving bank account is taxable in the
hands of Mr. Akshay as Income from other sources, since it has
accrued and arisen in India and is also received in India.
9,500
Less: Exemption under section 10(15) 3,500 6,000
Gross Total Income 1,50,000
Less: Deduction under section 80TTA 6,000
Total Income 1,44,000

Illustration 03
Mr. Rohan, an employee of ABC Ltd. is posted at Mumbai. He was appointed on 1st March
2024 on the scale of ₹ 60,000 - ₹ 2,000 -₹ 80,000. Details of his other income for the
previous year 2024-25 are as follows:
(i) Dearness allowance: 40% of basic salary (60% forms part of pay for retirement
benefits)
(ii) Telephone allowance @₹500 per month
(iii) Both Mr. Rohan and the company contribute 15% of basic salary to RPF. Interest
accrued in this Fund@12% p.a. amounted to ₹ 25,800.
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CA Jasmeet Singh Arora

(iv) The company has provided him with the rent free unfurnished accommodation in
Mumbai owned by the company.
(v) The salary of ₹ 2,500 p.m. of domestic servant is reimbursed by the company.
(vi) Rohan has used his own motor car of 1.8 ltr engine capacity for both official and
personal purposes. The running and maintenance costs of ₹ 50,000 are borne by
the company.
(vii) Professional tax paid ₹ 2,500 of which ₹ 1,500 was paid by the employer.
(viii) During the year 2023-24, Mr. Rohan gifted a sum of ₹ 6,00,000 to Mrs. Rohan. She
started a business by introducing such amount as her capital. On 1st April, 2024, her
total investment in business was ₹ 10,00,000. During the previous year 2024-25, she
has suffered a loss of ₹ 1,20,000 from such business
Determine the gross total income of Mr. Rohan for the A.Y. 2025-26 under normal
provisions of the Act.

Solution
Computation of gross total income of Mr. Rohan for the A.Y.2025-26
Particulars Amount (₹) Amount (₹)
I Salaries
Basic Salary (₹ 60,000 x 11 + ₹ 62,000 x 1) 7,22,000
Dearness Allowance (40% of ₹ 7,22,000) 2,88,800
Telephone allowance (₹ 500 x 12) 6,000
Employer’s contribution to RPF (15% of 1,08,300
₹ 7,22,000)
Less: Exempt [12% of salary i.e., 12% x 8,95,280 1,07,434 866
(7,22,000 + 60% of 2,88,800)
Interest accrued in the RPF@12% 25,800
Less: Exempt @9.5% p.a. 20,425 5,375
Value of Rent Free accommodation
From April 2024 to March 2025 90,128
[10% of ₹ 9,01,280 i.e., ₹ 7,22,000 (60,000 x
11 + 62,000 x 1) + 1,73,280 (₹ 7,22,000 x 40% x 60%) +
₹ 6,000 (₹ 500 x 12)]
Reimbursement of salary of domestic 30,000
servant [₹ 2,500 x 12]
Perquisite value of motor car
Running and maintenance costs incurred by 50,000
employer
Less: Specified as per Rule 3 [₹ 2,400 x 12] 28,800 21,200
Professional tax paid by employer 1,500
Gross Salary 11,65,869

Less: Deduction under section 16

Standard deduction 50,000
Professional tax paid 2,500 52,500
Taxable Salary 11,13,369
II Profit and gains from business or profession
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CA Jasmeet Singh Arora

Where the amount of Mr. Rohan (₹ 6 lakh, in this

case) is invested by Mrs. Rohan in a business as her
capital, proportionate share of profit or loss, as the
case may be, taking into account the value of the
investment as on 1.4.2023 to the total investment in
the business (₹ 10 lakhs) would be included in the (72,000) -
income of Mr. Rohan [loss of ₹ 1,20,000 x 6/10]
[Business loss of ₹ 72,000 cannot be set off against
salary income. It has to be carried forward to next
year]
Gross Total Income 11,13,369

Illustration 04
Mr. Mayank, a resident individual, furnished the following information in respect of
income earned and losses incurred by him for the F.Y. 2024-25
Particulars Amount (₹)
Income from Salary (Computed) 27,40,000
Long term capital loss on sale of shares of Reliance Ltd. STT has (1,25,000)
been paid both at the time of acquisition and sale
Income from let out property in Kanpur 5,50,000
Loss from let out property in Delhi (3,75,000)
Interest on self-acquired property in Mumbai (1,50,000)
Net winnings from online games (Net of TDS) 35,000
Profit and gains from manufacturing business (after deducting 36,86,000
normal depreciation of ₹ 2,00,000 and additional depreciation of
₹ 50,000)

The other details of losses and unabsorbed depreciation pertaining to A.Y. 2024-25 are
as follows:
Particulars Amount
Business loss from manufacturing business (5,35,000)
Unabsorbed normal depreciation (2,10,000)
Loss from the activity of owning and maintaining the race horses (1,50,000)
Loss from let out property in Delhi (2,10,000)
Mr. Mayank filed his return of income for A.Y. 2024-25 on 28.7.2024 and opted for
section 115BAC. Compute the Gross total income of Mr. Mayank for the A.Y. 2025-26
and the amount of loss, if any, that can be carried forward if he wants to continue with
the provisions under section 115BAC.

Solution
Computation of gross total income of Mr. Mayank for A.Y. 2025-26
Particulars Amount (₹) Amount (₹)
Income from Salary (Computed) 27,40,000
Income from house property
Income from let out property in Kanpur 5,50,000
Less: Set off of loss from let out property in Delhi (3,75,000)
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CA Jasmeet Singh Arora

Less: Interest u/s 24(b) is not allowed in case of self- -

occupied property since Mr. Mayank is paying tax
under section 115BAC]

Less: Loss from let out property in Delhi of -

A.Y. 2024-25 cannot be set off against income from
house property of A.Y. 2025-26 since Mr. Mayank has
paid tax under section 115BAC during the A.Y. 2024-25
and no deduction in respect of loss of house property
of that year will be allowed in any subsequent year.
PGBP 1,75,000
Profits from manufacturing business 36,86,000
Add: Additional depreciation not allowable in case of 50,000
section 115BAC
37,36,000

Less: Brought forward business loss of A.Y. 2024-25 (5,35,000)

Less: Unabsorbed normal depreciation (2,10,000) 29,91,000
Capital Gains
Long term capital loss on sale of shares of Reliance (1,25,000) -
Ltd. on which STT has been paid can be set off only
against long term capital gains. Hence, it has to be
carried forward
Income from Other Sources
Net winnings from online games [₹ 35,000/70%] 50,000
Gross Total Income 59,56,000

Losses to be carried forward to A.Y. 2026-27

Particulars Amount
Brought forward loss from the activity of owning and maintaining 1,50,000
the race horses of A.Y. 2024-25 can be set off only against the income
from the activity of owning and
maintaining race horses. Hence, it has to be carried forward.
Long term capital loss on sale of shares of Reliance Ltd. on which STT 1,25,000
has been paid

Illustration 05
Examine the applicability of Tax deduction at source (TDS) or Tax collection at source
(TCS) as per the Income-tax Act, 1961 for the A.Y 2025-26 in the following situations
(i) Mr. Arjun, a resident Indian, is in retail business in Delhi and his turnover for F.Y.2023-
24 was ₹ 9.90 crores. He regularly purchases goods from another resident, Mr.
Saurabh, a wholesaler in Noida. GST rate on such goods is 5%. The aggregate amount
of sales made by Mr. Saurabh to Mr. Arjun during the F.Y.2024-25 was ₹ 49 lakhs
(without GST). Mr Arjun made the payment for consideration of goods (₹ 21 lakhs on
8.7.2024, ₹ 26.25 lakhs on 27.8.2024 and₹ 4.2 lakhs on 11.3.2025).
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CA Jasmeet Singh Arora

(ii) Mr. Saurabh’s turnover for F.Y.2023-24 was ₹ 10.10 crores. Mr. Raja paid ₹ 12 lakhs on
1.11.2024 to M/s. Thomas Cook for a holiday package to Singapore for a week with his
family, comprising of his wife and two children, being twins aged 22 years, in the last
week of November. Mr. Raja also remitted ₹ 10 lakhs on 28.3.2025, out of his personal
savings, under LRS through Bank of India, as gift to his sister residing in London, on
the occasion of her 50th birthday.

Solution
(i) Since Mr. Arjun’s turnover for the F.Y. 2023-24 does not exceed ₹ 10 crores, TDS
provisions under section 194Q would not be attracted. However, TCS provisions
under section 206C(1H) would be attracted in the hands of Mr. Saurabh since his
turnover for the P.Y. 2023-24 exceeds ₹ 10 crores and his sales consideration
(including GST) from Mr. Arjun exceeds ₹ 50 lakhs. No tax is to be collected under
section 206C(1H) on 8.7.2024 and 27.8.2024 since the aggregate receipts till that
date i.e., ₹ 47.25 lakhs, has not exceeded the threshold limit of ₹ 50 lakhs. Tax of ₹
145 i.e., 0.1% of ₹ 1.45 lakhs has to be collected under section 206C(1H) on 11.3.2025
(₹ 4.20 lakhs - ₹ 2.75 lakhs, being the balance threshold limit)
(ii) M/s. Thomas Cook, being a seller of an overseas tour programme package has to
collect tax at source under section 206C(1G) from Mr. Raja on receiving amount
for purchase of package. For the amount received on or after 1.10.2024, tax has to
be collected @5% on upto ₹ 7 lakhs received and @20% on amount received above
₹ 7 lakhs. M/s Thomas Cook has to collect tax of ₹ 1,35,000, being ₹ 35,000 (5% of ₹
7 lakhs) and ₹ 1 lakh (20% of ₹ 5 lakhs). Bank of India, being an authorized dealer
has to collect tax at source under section 206C(1G) @20% on amount in excess of
₹ 7 lakhs remitted under the LRS on or after 1.10.2024 since the remittance of ₹ 10
lakhs is not for the purpose of education and medical treatment. Bank of India has
to collect tax of ₹ 60,000 i.e., 20% of ₹ 3 lakhs, being the amount remitted in excess
of ₹ 7 lakhs.

Case Scenario [GST]

Vintage Cinemas Pvt. Ltd. (VCPL) is a leading chain of multiplexes operating in several
States across India. The company has its corporate office in Mumbai, Maharashtra and is
registered under GST in multiple States including Maharashtra. The company offers
movie tickets, food and beverages and other entertainment-related services.
The turnover of the company in the preceding financial year as per the audited financial
statements was ₹ 175 crore. The company crossed the aggregate turnover of ₹ 35 crore
till June in the current year.
In July, VCPL opened a new multiplex in Gujarat wherein the commercial operations will
commence from August 1.
Due to operations in multiple States, the finance and accounts operations are handled
by a centralized team at the corporate office. The same team is also responsible for
filing the GST returns for all the GST registrations of the company.
The company is also engaged in leasing of space to independent vendors in its food
court against rental charges for the purpose of increasing the source of revenue.
The company obtained a new office building in Mumbai under a rental agreement and
paid an amount of ₹ 5 crore as refundable security deposit to the owner of the
premises. The term of the rental agreement is 5 years.
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CA Jasmeet Singh Arora

The company also dispatched advertisement material worth ₹ 35 lakh from

Maharashtra to Gujarat Multiplex for the upcoming movies by way of transport
through road in September. The company claimed input tax credit on such
advertisement material at the time of receipt in Maharashtra.
The rate of tax applicable on all inward and outward supplies is 18% IGST, 9% CGST and
9% SGST unless otherwise specified.
On the basis of the facts given above, choose the most appropriate answer to
Q.1 to Q.5 below -

MCQ 01
Which of the following statements is correct under GST law in relation to the
registration requirements of the company (VCPL) in relation to its operations to be
commenced in the State of Gujarat?
a) VCPL is not required to take GST registration for Gujarat multiplex till turnover of
Gujarat multiplex does not cross ₹ 20 lakh.
b) VCPL is required to take GST registration in Gujarat while commencing business in
Gujarat as aggregate turnover of VCPL has already exceeded ₹ 20 lakh in the current
financial year.
c) VCPL is allowed to add Gujarat multiplex as additional place of business under the
existing GST registration in Maharashtra.
d) VCPL is required to take GST registration only from next financial year subject to the
condition that turnover of current financial year for Gujarat multiplex exceeds ₹ 20
lakh.

MCQ 02
Which of the following statements is true in relation to filing of return by VCPL?
a) VCPL is required to file a single consolidated GST return for all States.
b) VCPL is required to file separate GST return for each State where it is registered.
c) VCPL is required to file returns only for the Maharashtra State where its corporate
office is located.
d) VCPL has an option to file return in the State with the highest turnover.

MCQ 03
VCPL is required to levy GST on rental charges .
a) only if the turnover of tenant exceeds ₹ 20 lakh.
b) only if the turnover of tenant exceeds ₹ 1.5 crore.
c) only if the total rental charge collection in hands of VCPL exceeds ₹ 20 lakh.
d) irrespective of the turnover of the tenant or the amount of rental charge collection
in the hands of VCPL.

MCQ 04
In respect of the refundable security deposit given by VCPL,
a) GST is payable on the deposit amount by the owner of the premises.
b) GST is payable on the deposit amount by VCPL.
c) there is no requirement to pay GST by the owner or VCPL.
d) GST is payable in equal proportion over the term of rent agreement by the owner of
premises.
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CA Jasmeet Singh Arora

MCQ 05
VCPL is for the advertisement material sent from Maharashtra Office to Gujarat office in
relation to the upcoming movies.
a) not liable to issue any document as the transaction is between entities having same
PAN.
b) liable to issue only a delivery challan.
c) liable to issue only a bill of supply.
d) liable to generate a tax invoice as well as an E-Way Bill.

Illustration 06
Blue Panda Pvt. Ltd. is a manufacturing company that supplies goods to various
registered dealers across India. The company had an aggregate turnover of ₹ 6 crore in
the financial year 2023-24. The finance team of the company is not sure whether e-
invoicing provisions are applicable to the company and is of the view that under e-
invoicing system, invoices need to be generated directly on the e-invoicing portal
instead of its ERP system.
You are required to advise the finance team on the following Question:-
a) What is e-invoicing, and whether it would apply to Blue Panda Pvt. Ltd.?
b) Does Blue Panda Pvt. Ltd. need to create its invoices directly on the e-invoicing
portal?

Solution
a) E-invoicing is a system for electronically reporting Business-to- Business (B2B)
invoices to the GST system for certain notified taxpayers whose turnover exceeds ₹
5 crore in any financial year from 2017-18 onwards. Since Blue Panda Pvt. Ltd. had an
aggregate turnover of ₹ 6 crore in FY 2023-2024, it is required to issue e-invoices for
its B2B transactions.
b) No, Blue Panda Pvt. Ltd. does not need to create invoices directly on the e-invoicing
portal. The company will continue generating its GST invoices using its own
Accounting/Billing/ERP system. The only requirement is that these invoices must be
reported to the Invoice Registration Portal (IRP) for validation and issuance of a
unique Invoice Reference Number (IRN).

Illustration 07
Briefly examine the place of supply in the following independent cases.
1. Ms. Shanti (unregistered resident of Gujarat) went to meet her parents at the native
place Patna, Bihar and buys a medical insurance policy for her parents from an
insurance company – MNT Insurers- of Patna (registered in Bihar). The location of
the recipient of services in the records of the MNT Insurers is Patna.
2. Lakhan Singh Transports Pvt. Ltd., a Goods Transportation Agency registered in
Noida, Uttar Pradesh, is hired by Ram Trade Links (registered supplier in New Delhi)
to transport its consignment of goods from its warehouse in Delhi to the house of a
buyer located in Roorkee, Uttar Pradesh.
3. Mr. Karan (Mumbai) takes a post-paid mobile connection in Mumbai from the
service provider - Freesia Ltd. and gives his residence address at Mumbai as the
address for billing with the said company.
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CA Jasmeet Singh Arora

Solution
1. The place of supply of insurance services provided to a person other than a
registered person, be the location of the recipient of services on the records of the
supplier of services. Thus, in the given case, the place of supply is the location of the
recipient of services in the records of the supplier, i.e. Patna.
2. The place of supply of services by way of transportation of goods, including by mail
or courier to a registered person, is the location of such person. Thus, in the given
case, the recipient being registered, the place of supply is the location of recipient,
i.e. New Delhi.
3. The place of supply of telecommunication services including data transfer,
broadcasting, cable and direct to home television services to any person in case of
mobile connection for telecommunication and internet services provided on post-
paid basis, be the location of billing address of the recipient of services on the
record of the supplier of services. Thus, in the given case, the place of supply is the
location of billing address of the recipient, i.e. Mumbai.

Illustration 08
List the accounts and records which are not required to be maintained by a supplier
who has opted for composition scheme, as per the provisions of the GST laws.

Solution
A supplier who has opted for composition scheme is not required to maintain following
records:
1. Stock of goods: Accounts of stock in respect of goods received and supplied by him,
and such accounts shall contain particulars of the opening balance, receipt, supply,
goods lost, stolen, destroyed, written off or disposed of by way of gift or free
sample and the balance of stock including raw materials, finished goods, scrap and
wastage thereof.
2. Details of tax: Account, containing the details of tax payable (including tax payable
under reverse charge), tax collected and paid, input tax, input tax credit claimed,
together with a register of tax invoice, credit notes, debit notes, delivery challan
issued or received during any tax period.

Illustration 09
M/s Consultease Services Private Limited, a company registered under GST in Mumbai,
Maharashtra, offers business consultancy, digital marketing and project management
services across India. The company recorded the following transactions in October:
1. Consultancy services for market analysis: Provided consultancy services for
market analysis to XYZ Ltd., a registered client in Chennai, Tamil Nadu (Inter-State), for
₹ 4,50,000. Additionally, the company paid an amount of ₹ 4,500 as professional tax
applicable in the State of Maharashtra as per requirement of local state legislation. The
amount of professional tax was recovered separately from XYZ Ltd.
2. Digital Marketing Services for Launch Event: Conducted digital marketing for an
upcoming product launch for Mr. A based in Rajasthan, who is an unregistered person
under GST. The agreed fee for the said services is ₹ 3,00,000. Out of the agreed fee, an
amount of ₹25,000 is incurred by Mr. A. The company was liable to pay the same in
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CA Jasmeet Singh Arora

relation to the supply and the net payment received by the company was ₹ 2,75,000
(exclusive of any tax).
3. Travelling payment for the team: The employees incurred an amount of ₹ 50,000
on travel to Kolkata for client project and claimed a reimbursement of the same from
the company. As a policy, company charged such expenses from the clients on actual
basis.
4. Discount passed on to customer: Post supply discount was offered to a customer
amounting to ₹ 50,000 against a supply for which invoice was issued in September. The
customer has not reversed the input tax credit relating to such discount.
5. Recovery of late payment charges: The company received an amount of ₹
1,00,000 as late payment charges for delay in payment for consideration from a client
whose service contract was completed in June.
6. Purchase of car: A car was purchased in the name of company for use by the
director. The total cost of car was ₹ 10,50,000 (inclusive of IGST amounting to ₹
1,50,000).
7. Insurance services: The company paid for insurance of the above new car
amounting to ₹ 25,000 which includes IGST amounting to ₹ 2,300.
8. Procurement of services: The company received inter-State supply of services
used for business purpose on which GST paid was Rs. 45,000. Said credit was not
restricted under any provision of GST laws.
9. Sponsorship: The company sponsored a sports event wherein it paid an amount
of ₹ 2,00,000 to the event organizers.

You are required to compute the following for the month of October:
a) Total value of supply
b) output tax payable by the Company
c) net GST payable in cash.

Note
a) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
b) All the amounts given above are exclusive of taxes.
c) There was no opening balance of input tax credit.
d) The turnover of the company was ₹ 10 crores in the previous financial year.
e) All the transactions are inter-State, unless otherwise specified.

Solution
a) Computation of total value of supply
Particulars IGST (₹)
Consultancy services provided to XYZ Ltd. 4,54,500
(As per section 15 of the CGST Act, 2017, the value of supply includes
the amount of any tax paid under any law other than GST. Accordingly,
the amount of professional tax is includible in the value of services.)
Digital marketing services provided to Mr. A 3,00,000
(The amount incurred by the recipient on behalf of the supplier is
includible in the value of supply.)
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CA Jasmeet Singh Arora

Travelling expenses recovered from the client (Incidental expenses 50,000

like travelling expenses incurred in course of supply is includible in
value of supply)
Post supply discount -
(No adjustment of post supply discount is allowed as the customer has
not reversed the input tax credit.)
Late payment charges 1,00,000
(The late payment charges recovered are includible in GST and liable
to tax at the time of receipt of amount.)
Total value of supply for October 9,04,500

b) Computation of output tax payable

Particulars IGST (₹)
Total value of outward supply 9,04,500
Total output tax payable @ 18% 1,62,810
(Company is liable to pay GST on sponsorship services under reverse
charge, but the tax payable under reverse charge is not included in
the value of output tax.)

c) Computation of net GST payable in cash

Particulars IGST (₹)
Total output tax 1,62,810
Less: Input Tax Credit [Refer Working Note below] (81,000)
Net GST payable (A) 81,810
Add: GST payable under reverse charge for receipt of sponsorship 36,000
services (B)
[Tax on sponsorship services availed by a body corporate from any
person is payable under reverse charge. Since the tax payable under
reverse charge is not an output tax, ITC cannot be utilized to pay GST
payable under reverse charge. Thus, it has to be paid in cash.]
Total GST payable in cash (A) +(B) 1,17,810

Working Note:
Computation of ITC available
Particulars IGST (₹)
Purchase of car for use by director -
(ITC on motor vehicles for transportation of persons with seating
capacity ≤ 13 persons (including the driver) is blocked except when the
same are used for (i) making further taxable supply of such motor
vehicles (ii) making taxable supply of transportation of passengers (iii)
making taxable supply of imparting training on driving such motor
vehicles. Purchase of car for use by director is not a specified purpose.)
Insurance of car -
(ITC is not allowed on services of insurance relating to the motor
vehicles on which ITC is blocked.
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CA Jasmeet Singh Arora

Since, the car is not used for any of the eligible purposes, ITC thereon is
blocked and thus, ITC on insurance taken on such car is also blocked)
ITC on receipt of services 45,000
(ITC is available on services used in the course or furtherance of
business.)
ITC on sponsorship services 36,000
(ITC is available on services used in the course or furtherance of
business.)
Total ITC available 81,000

Illustration 10
Mr. Bholuram, a supplier located in Meerut, U.P. supplied the bedsheets, pillow covers
and blankets to a Governmental agency, registered in U.P. under a contract. The total
contract value is ₹ 4,61,000 excluding GST. The value of supply is bifurcated as below:
400 Blankets for ₹ 600 each ₹ 2,40,000
850 Bed Sheets for ₹ 180 each ₹ 1,53,000
1700 Pillow Covers for ₹ 40 each ₹ 68,000
Is Governmental agency required to deduct tax at source (while making the payment to
Mr. Bholuram) under section 51 of the CGST Act, 2017 and if yes, determine the amount
of tax to be deducted source?

Solution
As per section 51 of the CGST Act, 2017, it is mandatory for the following persons to
deduct tax at source from payments made to the suppliers of taxable goods and/or
services:-
1) Central/State Government department or establishment;
2) local authority; or
3) Governmental agencies; or
4) such notified persons
The tax would be deducted @ 1% (each under CGST and SGST) of the payment made to
the supplier of taxable goods and/or services, where the total value of such supply,
under a contract, exceeds ₹ 2,50,000 (excluding the amount of Central tax, State tax,
Union Territory tax, Integrated tax and cess indicated in the invoice). Thus, individual
supplies may be less than ₹ 2,50,000/-, but if total value of supplies under a contract is
more than ₹ 2,50,000/-, TDS has to be deducted.
In the given case, Mr. Bholuram has made supplies to a Governmental agency and total
value of supply under a contract exceeds ₹ 2,50,000, it is mandatory for Governmental
agency to deduct TDS @1% each under CGST and SGST on the net value of taxable
supplies.
The amount of TDS required to be deducted each under CGST & SGST each is ₹ 4,610.