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Mock Test Paper - Series I: March, 2024

Date of Paper: 9 March, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
SOLUTIONS
Division A – Multiple Choice Questions
MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (d) 3. (c)
(ii) (a) 4. (b)
(iii) (b)
2. (i) (c)
(ii) (d)
(iii) (d)
Division B – Descriptive Questions
1. Computation of total income of Mr. Amit as per section 115BAC for A.Y.
2024-25
Particulars `
Net profit as per profit and loss account 50,85,000
Less: Income-tax refund credited in the profit and loss
account, out of which interest on such refund is only
taxable, which is to be considered separately under 30,000
the head “Income from other sources”
50,55,000
Add: Expenses either not allowable or to be considered
separately but charged in the profit & loss account
- Salary paid to brother disallowed to the extent 5,000
considered unreasonable [Section 40A(2)]
- Advertisement in the souvenir of political party not 2,500
allowable as per section 37(2B) (See Note 1)
- Payment made to political party by cheque (See 1,00,000
Note 2)
- Penalty levied by the Goods and Services tax 5,300
department for delayed filing of returns not
allowable as being paid for infraction of law (See
Note 3)
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- Depreciation as per books 1,07,250

- 30% of interest paid on loan paid to Mr. Mohit, a
resident, without deduction of tax at source not 24,000
allowable as per section 40(a)(ia)
52,99,050
Less: Depreciation allowable as per Income-tax
Act, 1961 65,000
Depreciation on building [` 20 lakhs x 2,00,000 2,65,000
10%]
Profits and gains from business or profession 50,34,050
Income from Other Sources
Interest on income-tax refund 4,570
Gross Total Income 50,38,620
Less: Deduction under section 80GGC [Contribution to Nil
Political Party] [Not allowable]
Total Income 50,38,620
Notes –
(1) The amount of ` 2,500 paid for advertisement in the souvenir issued by
a political party attracts disallowance under section 37(2B).
(2) Payment to political party is not an expenditure incurred wholly and
exclusively for business purpose and hence not allowance under section
37(1). Since the amount has been debited to profit and loss account, the
same has to be added back for computing business income.
(3) The interest of ` 12,750 paid on the delayed deposit of goods and
services tax is for breach of contract and hence, is allowable as
deduction. However, penalty of ` 5,300 for delay in filing of returns is not
allowable since it is for breach of law.
(4) Deduction under section 35AD is not allowable as per section
115BAC(2). However, normal depreciation u/s 32 is allowable.
Computation of tax liability as per section 115BAC
Particulars ` `
Tax on total income of ` 50,38,620
Upto ` 3,00,000 Nil
` 3,00,001 – ` 6,00,000 [@5% of ` 3 lakhs] 15,000
` 6,00,001 – ` 9,00,000 [@10% of ` 3 lakhs] 30,000
` 9,00,001 – ` 12,00,000 [@15% of ` 3 lakhs] 45,000
` 12,00,001 – ` 15,00,000 [@20% of ` 3 lakhs] 60,000
` 15,00,001 – ` 50,38,620 [@30% of 10,61,586
` 35,38,620]
12,11,586
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Add: Surcharge @10% [Since, the total income

exceeds ` 50 lakhs but does not exceed ` 1 1,21,159
crore]
13,32,745
Less: Marginal relief (See computation below) 94,125
12,38,620
Add: Health and education cess@4% 49,545
Total tax liability 12,88,165
Total tax liability (Rounded off) 12,88,170
Computation of marginal relief
Particulars `
(A) Tax payable including surcharge on total income of 13,32,745
` 50,38,620 as per section 115BAC
(B) Tax payable on total income of ` 50 lakhs as per section 12,00,000
115BAC
(C) Excess tax payable (A-B) 1,32,745
(D) Marginal relief (` 1,32,745 – ` 38,620, being the amount 94,125
of income in excess of ` 50 lakhs)
Note - An individual paying tax u/s 115BAC is not liable to alternate minimum
tax u/s 115JC.
Computation of total income of Mr. Amit for A.Y. 2024-25 under normal
provisions of the Act
Particulars ` `
Gross Total Income as per default tax regime 50,38,620
under section 115BAC
Add: Depreciation on building [` 20 lakhs x 10%] 2,00,000
52,38,620
Less: Warehousing charges 22,50,000
Gross Total Income excluding profits and gains 29,88,620
from specified business under section 35AD
Profits and gains from specified business
under section 35AD
Warehousing charges 22,50,000
Less: Deduction under section 35AD (See Note 1) 20,00,000 2,50,000
Gross Total Income as per normal provisions of 32,38,620
the Act
Less: Deduction under section 80GGC for 1,00,000
contribution to Political Party (See Note 2)
Total Income as per regular provisions of the 31,38,620
Act
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Notes –
(1) Deduction @100% of the capital expenditure is available under section
35AD in respect of specified business of setting up and operating a
warehouse facility for storage of agricultural produce which commences
operation on or after 1.04.2009.
(2) Payment to political party qualifies for deduction under section 80GGC
since the payment is made by way of a cheque.
Computation of tax liability of Mr. Amit for A.Y. 2024-25 under the
regular provisions of the Act
Particulars ` `
Tax on total income of ` 31,38,620
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000 [@5% of ` 2.50 lakh] 12,500
` 5,00,001 – ` 10,00,000 [@20% of ` 5,00,000] 1,00,000
` 10,00,001- ` 31,38,620 [@30% of ` 21,38,620] 6,41,586 7,54,086
Add: Health and education cess@4% 30,163
Total tax liability 7,84,249
Total tax liability (rounded off) 7,84,250

Computation of adjusted total income and AMT of Mr. Amit for

A.Y. 2024-25
Particulars ` `
Total Income (computed above as per regular 31,38,620
provisions of income tax)
Add: Deduction under section 35AD 20,00,000
Less: Depreciation under section 32 on building [` (2,00,000) 18,00,000
20 lakhs x 10%]
Adjusted Total Income 49,38,620
Alternative Minimum [email protected]% 9,13,645
Add: Health and education cess@4% 36,546
Total tax liability 9,50,191
Total tax liability (rounded off) 9,50,190
Since the regular income-tax payable is less than the alternate minimum tax
payable, the adjusted total income shall be deemed to be the total income and
tax is leviable @18.5% thereof plus cess@4%. Therefore, liability as per
section 115JC is ` 9,50,190.
Since the tax liability of Mr. Amit under section 115JC is lower than the tax
liability as computed u/s 115BAC, it would be beneficial for him to opt out of
the default tax regime under section 115BAC for A.Y. 2024-25 and pays tax

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under regular provisions of the Act. Moreover, benefit of alternate minimum

tax credit is also available to the extent of tax paid in excess of regular tax.
AMT credit to be carried forward under section 115JEE
Particulars `
Tax liability under section 115JC 9,50,190
Less: Tax liability under the regular provisions of the 7,84,250
Income-tax Act, 1961
1,65,940
2. (a) As per section 6(1), an Indian citizen or a person of Indian origin who,
being outside India, comes on a visit to India would be resident in India
if he or she stays in India for a period of 182 days or more during the
relevant previous year in case such person has total income, other than
the income from foreign sources, not exceeding ` 15 lakhs. However, if
such person has total income, other than the income from foreign
sources, exceeding ` 15 lakhs, he would also be a resident if he has
been in India for at least 120 days during the relevant previous year and
has been in India during the 4 years immediately preceding the previous
year for a total period of 365 days or more. In such a case, he would be
resident but not ordinarily resident in India.
Income from foreign sources means income which accrues or arises outside
India (except income derived from a business controlled in or a profession
set up in India) and which is not deemed to accrue or arise in India.
In this case, total income, other than the income from foreign sources,
of Mr. Akash for P.Y. 2023-24 would be
Particulars Amount (`)
Salary from ABC Inc., California received in California -
(Computed) (Not included in total income, since it is
income from foreign source)
Dividend from Indian companies (Included in total 5,00,000
income, since it is deemed to accrue or arise in India)
Agricultural income from land situated in Nepal (Not -
included in total income, since it is accrued or arisen
outside India and received outside India)
Rent received/receivable from house 5,50,000
property in Delhi (Included in total income,
since it is deemed to accrue or arise in
India)
Less: 30% of ` 5.50 lakhs 1,65,000 3,85,000
Profits from a profession in California, which was set up 6,00,000
in India, received there
Total income, other than the income from foreign 14,85,000
sources

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Since, Mr. Akash is an Indian citizen who comes on a visit to India only
for 121 days in the P.Y. 2023-24 and his total income, other than income
from foreign sources does not exceed ` 15 lakhs, he would be non-
resident for the A.Y. 2024-25.
A non-resident is chargeable to tax in respect of income received or
deemed to receive in India and income which accrues or arises or is
deemed to accrue or arise to him in India. Accordingly, his total income
would be as follow –
Particulars Amount (`)
Salary from ABC Inc., California received in -
California (Computed) (Not taxable, since it neither
accrues or arises in India nor is it received in India)
Dividend from Indian companies (Taxable, since 5,00,000
deemed to accrue or arise in India)
Agricultural income from land situated in Nepal (Not -
taxable, since it neither accrues or arises in India nor
is it received in India)
Rent received/receivable from house 5,50,000
property in Delhi (Taxable, since it is
deemed to accrue or arise in India)
Less: 30% of ` 5.50 lakhs 1,65,000 3,85,000
Profits from a profession in California, which was set -
up in India, received there
Gross Total Income/ Total income 8,85,000
(b) TDS implications
(i) Section 194-I, which governs the deduction of tax at source @10%
on payment of rent, exceeding ` 2,40,000 p.a., is applicable to all
persons except individuals and HUF, whose turnover/gross
receipts do not exceed ` 1 crore in case of business or ` 50 lakhs
in case of profession during the financial year immediately
preceding the financial year in which such rent is credited or paid.
In the present case, State Bank of India has to deduct at source
@ 10% on rental payment to Mr. Kunal.
Tax deducted at source = ` 72,000 (` 7,20,000 x 10%)
Section 196, however, provides exemption in respect of payments
made to Government from application of the provisions of tax
deduction at source.
Therefore, no tax is required to be deducted at source by State
Bank of India from rental payments to the Government.
(ii) As per section 194C, no tax is required to be deducted at source
on payment to transporter if the following conditions are satisfied:

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(1) He owns ten or less goods carriages at any time during the
previous year.
(2) He is engaged in the business of plying, hiring or leasing
goods carriages;
(3) He furnishes a declaration to this effect along with his PAN.
In the present case, since Mr. Deepak has not furnished his PAN,
tax is required to be deducted at source @ 20% under section
206AA on ` 2,50,000, since the same exceeds the threshold limit
of ` 1,00,000.
Tax deducted at source = ` 50,000 (` 2,50,000 x 20%)
3. (a) Computation of Income under the head “Salaries” in the hands of
Mr. Sahil for the A.Y. 2024-25
Particulars `
Basic Salary [` 55,000 x 12] 6,60,000
Dearness allowance [10% of basic salary] 66,000
Bonus 60,000
Fixed Medical Allowance [Taxable] 50,000
Reimbursement of Medical expenditure incurred for his 6,500
father [Fully taxable]
Facility of laptop [Facility of laptop is an exempt Nil
perquisite, whether used for official or personal purpose
or both]
Reimbursement of salary of domestic servant [` 8,000 x 96,000
12] [Fully taxable, since perquisite includes any sum paid
by the employer in respect of any obligation which would
have been payable by the employee]
Value of equity shares allotted [700 equity shares x ` 110 77,000
(` 280, being the fair market value – ` 170, being the
amount recovered)]
Professional tax paid by the employer [Perquisite includes
any sum paid by the employer in respect of any obligation 1,400
which would have been payable by the employee]
Gross Salary 10,16,900
Less: Deduction under section 16
Professional tax paid [Not allowed] -
Standard Deduction (Lower of ` 50,000 or amount 50,000
of salary)
Taxable Salary 9,66,900

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(b) Computation of income from house property of Mr. Kushal for

A.Y. 2024-25
Particulars ` `
1. Income from let-out property in New
York [See Note 1 below]
1Gross Annual Value ($ 5,000 p.m. x 12 48,60,000
months x ` 81)
Less: Municipal taxes paid during the year
[$ 2,000 ($ 1,250 + $ 750) x ` 81]2 1,62,000
Net Annual Value (NAV) 46,98,000
Less: Deductions under section 24
(a) 30% of NAV 14,09,400
(b) Interest on housing loan - 14,09,400
32,88,600
2. Income from self-occupied property
in Ahmedabad
Annual Value [Nil, since the property is self- NIL
occupied]
[No deduction is allowable in respect of
municipal taxes paid in respect of self-
occupied property]
Less: Deduction in respect of interest on 2,00,000
housing loan [See Note 2 below]
(2,00,000)
Income from house property 30,88,600
[` 32,88,600 – ` 2,00,000]
Notes:
(1) Since Mr. Kushal is a resident but not ordinarily resident in India for
A.Y. 2024-25, income which is, inter alia, received in India shall be
taxable in India, even if such income has accrued or arisen outside
India by virtue of the provisions of section 5(1). Accordingly, rent
received from house property in New York would be taxable in India
since such income is received by him in India.
(2) Interest on housing loan for construction of
self-occupied property allowable as deduction
under section 24
Interest for the current year (` 30,00,000 x 10%) ` 3,00,000

1 In the absence of information related to municipal value, fair rent and standard rent, the rent receivable
has been taken as the GAV
2 Both property tax and sewerage tax qualify for deduction from gross annual value

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Pre-construction interest
For the period 01.09.2018 to 31.03.2020
(` 30,00,000 x 10% x 19/12) = ` 4,75,000
` 4,75,000 allowed in 5 equal installments ` 95,000
(` 4,75,000/5)
` 3,95,000
In case of self-occupied property, interest
deduction to be restricted to ` 2,00,000

4. (a) Computation of Total Income of Mr. Vishal for A.Y. 2024-25

Particulars Amount Amount
(`) (`)
Income from house property
House in Delhi [Since Mr. Vishal receives
direct or indirect benefit from income arising
to his brother’s daughter, Ms. Deepika, from
the transfer of house to her without
consideration, such income is to be included
in the total income of Mr. Vishal, even though
the transfer may not be revocable during
lifetime of Ms. Deepika]
Gross Annual Value 3 5,50,000
Less: Municipal taxes -
Net Annual Value 5,50,000
Less: Deductions from Net Annual Value
(a) 30% of Net Annual Value 1,65,000
(b) Interest on loan -
3,85,000
Capital Gains
Long term capital gain from sale of property 15,000
Less: Short-term capital loss can be set-off 15,000 -
against both short-term capital gains and
long-term capital gains. Short term capital
loss of ` 16,000 set off against long-term
capital gains to the extent of `15,000. Balance
short term capital loss of ` 1,000 to be carry
forward to A.Y.2025-26

3 Rent receivable has been taken as the gross annual value in the absence of other information.
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Income from other sources

Dividend on preference shares [Taxable in 4,50,000
the hands of Mr. Vishal as per section 60,
since he transferred the income, i.e.,
dividend, without transferring the asset, i.e.,
preference shares]
Interest from saving bank account 1,75,000
Cash gift [Taxable as per section 56(2)(x), 75,000
since sum of money exceeding ` 50,000 is
received from his niece, who is not a relative]
Income from betting [No loss is allowed to be 25,000
set off against such income]
Income from card games [No loss is allowed 46,000 7,71,000
to be set off against such income]
Gross Total Income 11,56,000
Less: Deduction under Chapter VI-A
Deduction under section 80TTA [Interest
from savings bank account] 10,000 10,000
Total Income 11,46,000
Losses to be carried forward to A.Y. 2025-26
Particulars Amount (`)
Short term capital loss [` 16,000 – ` 15,000] 1,000
Loss on maintenance of race horses [Loss incurred on 14,600
maintenance of race horses cannot be set-off against
income from any source other than the activity of
owning and maintaining race horses.

(b) First alternative

As per section 139(3), an assessee is required to file a return of loss
within the due date specified u/s 139(1) for filing return of income.
As per section 80, certain losses which have not been determined in
pursuance of a return filed under section 139(3) on or before the due
date specified under section 139(1) cannot be carried forward and set-
off. Thus, the assessee has to file a return of loss under section 139(3)
within the time allowed u/s 139(1) in order to carry forward and set off of
following losses:
- loss under the head “Capital Gains”,
- loss from activity of owning and maintaining race horses.
- business loss,
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- speculation business loss and

- loss from specified business.
However, following can be carried forward for set-off even if the return
of loss has not been filed before the due date:
- Loss under the head “Income from house property” and
- Unabsorbed depreciation
(b) Second alternative
Transaction Is quoting of PAN mandatory
in related documents?
1. Sale of scooter for ` 70,000 No, quoting of PAN is not
mandatory on sale of scooter.
2. Payment of life insurance Yes, since the amount paid
premium of ` 67,000 to exceeds ` 50,000.
insurance company
3. Purchase of plot for ` 9 lakhs Though the amount of
while the stamp duty of the consideration does not exceed
same is ` 11 lakhs ` 10 lakhs, Mr. Vishnu has to
quote PAN since stamp duty of
plot exceeds ` 10 lakhs.
4. Applied to PNB for issue of Yes, quoting of PAN is
credit card mandatory on making an
application to a banking
company for issue of credit
card.

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SECTION B – GOODS AND SERVICES TAX (50 MARKS)

SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1 (b) Invoice shall be issued before or at the time of removal of
smartphones to distributors.
2 (b) ITC of Rs. 18 lakh can be claimed and depreciable value
of asset in the books shall be Rs. 1 crore
3 (a) The demerged entity shall be treated as related party of the
Company.
4 (d) 72 months from due date of furnishing annual return for the
relevant financial year
5 (a) 45 days
6 (c) The restriction of 180 days for payment of consideration is
not applicable in the present case.
7 (b) 2 days
8 (c) Both (a) and (b)

Division B - Descriptive Questions

1. (a) Computation of GST payable on outward supplies
S. Particulars CGST SGST IGST
No. @ 9% (`) @ 9% (`) @ 18% (`)
(i) Intra-State supply of goods for 36,000 36,000 Nil
` 4,00,000 [Note-1]
(ii) Services rendered by way of 9,000 9,000 Nil
labour contracts for repairing
a single residential unit
otherwise than as a part of
residential complex [Note-2]
(iii) Services provided by way of Nil Nil 1,800
training in recreational
activities relating to sports
[Note-3]
(iv) Inter-State security services Nil Nil 2,700
provided to Bharat higher
secondary school for their
annual day function to be held
in Kaman Auditorium.[Note-4]
Total GST payable 45,000 45,000 4,500

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Notes
1. A registered person (excluding composition supplier) has to pay
GST on the outward supply of goods at the time of supply as
specified in section 12 of the CGST Act, 2017, i.e. date of issue
of invoice or the last date on which invoice ought to have been
issued. Thus, liability to pay tax on the advance received in
January will also arise in the month of February, when the invoice
for the supply is issued.
2. Services by way of pure labour contracts of construction, erection,
commissioning, or installation of original works pertaining to a
single residential unit otherwise than as a part of a residential
complex are exempt. Labour contracts for repairing are thus,
taxable.
3. Services by way of training in sports is exempt under GST, only if
provided by charitable entities registered under section 12AA or
section 12AB of the Income-tax Act,1961. Thus, in the given case,
said service is taxable.
4. Security services provided to Bharat higher secondary School for
Annual Day function organised outside the school campus will be
taxable as only the security services performed within the
premises of the higher secondary school are exempt.
Computation of total ITC
Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
Opening ITC 57,000 Nil 50,000
Add: Purchase of goods from a Nil Nil Nil
composition dealer
[ITC is not available in case of supply
of goods where tax has been paid
under composition scheme]
Add: Membership of a club [Blocked Nil Nil Nil
credit]
Add: Goods transport services Nil Nil 24,000
received from GTA
[Input tax credit is available for the
services received from GTA as the
same are used in the course or
furtherance of business.]
Add: Inputs to be received in 4 lots, Nil Nil Nil
out of which 2 nd lot was received
during the month [In case of goods
received in lots, ITC can be taken
only upon receipt of the last lot]
Total ITC 57,000 Nil 74,000
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Computation of minimum GST payable from electronic

cash ledger
Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
GST payable 45,000 45,000 4,500
Less: ITC [First ITC of IGST should be (24,500) (45,000 (4,500)
utilized in full - first against IGST IGST ) IGST
liability and then against CGST and (3) IGST (1)
SGST liabilities in a manner to (2)
minimize cash outflow]
Less: ITC of CGST to be used against (20,500)
CGST CGST
Minimum GST payable in cash Nil Nil Nil
Note: Since sufficient balance of ITC of CGST is available for paying
CGST liability and cross utilization of ITC of CGST and SGST is not
allowed, ITC of IGST has first been used to pay SGST (after paying IGST
liability) and then CGST to minimize cash outflow.
(b) Computation of GST liability
S. Particulars Mridul Kalu
No. Traders Motors Ltd.
(`) (`)
(i) Price of goods 10,000 30,000
(ii) Add: Packing charges (Note-1) 500
(iii) Add: Commission (Note-1) 500
(iv) Add: Weighment charges (Note-1) - 2,000
(v) Less: Discount for prompt payment
(Note-2) - 1,000
Value of taxable supply 11,000 31,000
IGST payable @ 18% (Note-3) 1,980
CGST payable @ 9% (Note-4) 2,790
SGST payable @ 9% (Note-4) 2,790
Notes:
1. Incidental expenses, including commission and packing, charged
by supplier to recipient of supply is includible in the value of supply.
Weighment charges are also incidental expenses, hence includible
in the value of supply [Section 15 of the CGST Act, 2017].
2. Since discount is known at the time of supply, it is deductible from
the value in terms of section 15 of the CGST Act, 2017.
3. Section 10 of the IGST Act, 2017 provides that where the supply
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involves movement of goods, the place of supply of such goods

shall be the location of the goods at the time at which the movement
of goods terminates for delivery to the recipient. Thus, place of
supply is Gujarat.
Further, where the location of the supplier and the place of supply
are in two different States, supply of goods shall be treated as a
supply of goods in the course of inter-State trade or commerce.
Since supply made to Mridul Traders is an inter-State supply, IGST
is payable.
2. (a)
S. No. Particulars Taxability
(i) Supply of manpower for cleanliness of roads not Exempt
involving any supply of goods.
[Pure services provided to Government are
exempt.]
(ii) Service provided by Fair Price Shops by way of Exempt
sale of sugar under Public Distribution System
[Service provided by Fair Price Shops to
Government by way of sale of sugar under Public
Distribution System against consideration in the
form of commission is exempt.]
(iii) Service of maintenance of street lights in a Taxable
Municipal area involving replacement of defunct
lights and other spares constituting 35% of the
supply of service.
[Composite supply of goods and services to
Government in which the value of supply of goods
constitutes not more than 25% of the value of the
said composite supply is exempt. Since, in this
case value of supply of goods constitutes 35% of
the supply of composite service, same is taxable.]
(iv) Service of brochure distribution provided under a Taxable
training programme.
[Services provided to the Government under any
training programme for which 75% or more of the
total expenditure is borne by the Government is
exempt. Since in the given case, 70% of the total
expenditure is borne by the Government, it is
taxable.]
(b) (i) As per Para I of Schedule III of the CGST Act,2017 services by an
employee to the employer in the course of or in relation to his
employment are non-supplies, i.e. they are neither supply of goods
nor supply of services. Services provided by the independent
directors who are not employees of the said company to such
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company, in lieu of remuneration as the consideration for the said

services, are clearly outside the scope of Schedule III of the CGST
Act and are therefore taxable. Further, such remuneration paid to
the directors is taxable in hands of the company, on reverse charge
basis.
Thus, GST is applicable in this case and Star Company Private
Limited is liable to pay GST.
(ii) The part of director’s remuneration which is declared as salaries in
the books of a company and subjected to TDS under section 192
of the Income-tax Act (IT Act), is not taxable being consideration
for services by an employee to the employer in the course of or in
relation to his employment in terms of Schedule III of the CGST
Act,2017.
Further, the part of employee director’s remuneration which is
declared separately other than salaries in the company’s accounts
and subjected to TDS under section 194J of the IT Act as fees for
professional or technical services are treated as consideration for
providing services which are outside the scope of Schedule III and
is therefore, taxable. The recipient of the said services i.e. the
company, is liable to discharge the applicable GST on it on reverse
charge basis.
In lieu of the above provisions, ` 60,000 declared as salaries in the
books of Star Company Private Limited and subjected to TDS under
section 192 of the Income-Tax Act (IT Act), is not taxable being
consideration for services by an employee to the employer in the
course of or in relation to his employment in terms of Schedule III
of the CGST Act,2017.
Further, ` 65,000 declared separately other than salaries in the Star
Company Private Limited’s accounts and subjected to TDS under
section 194J of the IT Act as professional services is treated as
consideration for providing services which is outside the scope of
Schedule III of the CGST Act,2017 and is therefore, taxable. The
recipient of the said services i.e. the Star Company Private Limited,
is liable to discharge the applicable GST on it on reverse charge
basis.
3. (a) As per section 22 of the CGST Act, 2017 read with Notification No.
10/2019 CT dated 07.03.2019, a supplier is liable to get registered in the
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 limit for a person making exclusive intra -
State taxable supplies of goods is as under:-
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura,
Manipur and Nagaland.
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh,

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Meghalaya, Puducherry, Sikkim, Telangana and Uttarakhand.

(c) ` 40 lakh for rest of India except persons engaged in making
supplies of fly ash bricks/blocks, building bricks, bricks of fossil
meals, earthen/roofing tiles, ice cream and other edible ice,
whether or not containing cocoa, Pan masala and Tobacco and
manufactured tobacco substitutes.
In the light of the afore-mentioned provisions, the answer to the
independent cases is as under:
(i) The benefit of enhanced threshold limit of registration of ` 40 lakh
is not applicable for Om Sai brothers even though it is exclusively
engaged in intra-State taxable supply of goods in Delhi as it is
engaged in making supplies of building bricks. Thus, the applicable
threshold limit for registration for Om Sai Builders in the given case
is ` 20 lakh. Thus, it is liable to get registered under GST as it’s
turnover is more than the threshold limit.
(ii) Hukum Chand could have been eligible for enhanced threshold limit
of turnover for registration, i.e. ` 40 lakh as he is exclusively
engaged in intra-State supply of goods. However, since Hukum
Chand is engaged in supplying footwear from a Special Category
State i.e. Nagaland, the threshold limit gets reduced to ` 10 lakh.
Thus, Hukum Chand is liable to get registered under GST as his
turnover exceeds ` 10 lakh. Further, he is required to obtain
registration in both Himachal Pradesh and Nagaland as he is
making taxable supplies from both the States.
(b) A supplier who has opted for composition scheme is not required to
maintain records relating to;
(i) 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.
(ii) 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.
Thus, Mr. Mehta is not required to maintain above mentioned records.
4. (a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
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Since the event is being held in multiple states and a consolidated

amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed in accordance with IGST
Rules by the application of generally accepted accounting principles.
Or
(a) It has been clarified vide a circular that securities are considered neither
as goods nor as services in terms of definition of goods and the definition
of services. Further, securities include 'shares' as per definition of
securities.
This implies that the securities held by the holding company in the
subsidiary company are neither goods nor services. Further, purchase
or sale of shares or securities, in itself is neither a supply of goods nor a
supply of services. For a transaction/activity to be treated as supply of
services, there must be a supply as defined under section 7 of the CGST
Act, 2017. It cannot be said that a service is being provided by the
holding company to the subsidiary company, solely on the basis that
there is a specific SAC entry in the scheme of classification of services,
unless there is a supply of services by the holding company to the
subsidiary company in accordance with section 7 of the CGST Act, 2017.
Therefore, the activity of holding of shares of subsidiary company by the
holding company per se cannot be treated as a supply of services by a
holding company to the said subsidiary company and cannot be taxed
under GST.
(b) In GST since the returns are built from details of individual transactions,
there is no requirement for having a revised return. Any need to revise
a return may arise due to the need to change a set of invoices or debit/
credit notes. Instead of revising the return already submitted, the system
allows amendment in the details of those individual details of those
transactions (invoices or debit/credit notes) that are required to be
amended. They can be amended in any of the future GSTR-1 in the
tables specifically provided for the purposes of amending previously
declared details.
Omission or incorrect particulars discovered in the returns filed under
section 39 of the CGST Act, 2017 can be rectified in the return to be filed
for the month during which such omission or incorrect particulars are
noticed. Any tax payable as a result of such error or omission will be
required to be paid along with interest. The rectification of
errors/omissions is carried out by entering appropriate particulars in

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“Amendment Tables” contained in GSTR-1. However, no such

rectification of any omission or incorrect particulars is allowed after
30th November following the end of the financial year to which such
details pertain, or the actual date of furnishing of relevant annual return,
whichever is earlier.

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