CA INTER

TAXATION

Goods and Services Tax

Test-27 Chapter-14 (Solution)

Total Marks 35

Ans-1

As per section 51 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017, following
persons are required to deduct CGST @ 1% [Effective tax 2% (1% CGST + 1% SGST/UTGST)]
or IGST @ 2% from the payment made/credited to the supplier (deductee) of taxable goods
or services or both, where the total value of such supply, under a contract, exceedsRs.
2,50,000 :

(a) a department or establishment of the Central Government or State Government; or

(b) local authority; or

(c) Governmental agencies; or

(d) an authority or a board or any other body, -

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,

with 51% or more participation by way of equity or control, to carry out any function; or

(e) Society established by the Central Government or the State Government or a Local
Authority under the Societies Registration Act, 1860, or

(f) Public sector undertakings.

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Further, for the purpose of deduction of tax, the value of supply shall be taken as the
amount excluding CGST, SGST/ UTGST, IGST and GST Compensation Cess indicated in the
invoice.

Since in the given case, Yash Shoppe is supplying goods and services exclusively to
Government departments, agencies etc. and persons notified u/s 51 of the CGST Act, 2017,
applicability of TDS provisions on its various receivables is examined in accordance with the
above-mentioned provisions as under:

Contract
S.NO. Particulars Total Value Tax to be deducted
contract CGST SGST IGST
Exclusive
value(Rs.)
GST (`) (`) (`)
Supply of Computer
(i) stationery to Public 2,72,000 2,42,857
Sector Undertaking
(PSU) located in

Mumbai [WN-1]
Supply of Air
(ii) conditioner to GST 2,55,000 2,55,000 5,100

Department located
in Delhi [WN-2]
Supply of Generator
(iii) renting service to 3,50,000 3,12,500 3,125 3,125

Municipal
Corporation of
Jaipur [WN-3]

Total 3,125 3,125 5,100

Working Notes:

(1) No TDS where total value of supply under the contract does not exceedRs. 2,50,000 :
Being an inter-State supply of goods, supply of stationery to Public Sector Undertaking (PSU)

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located in Mumbai is subject to IGST @ 12%. Therefore, total value of taxable supply
[excluding IGST] under the contract is as follows:

=Rs. 2,72,000 × 100/112

=Rs. 242,857 (rounded off)

Since the total value of supply under the contract does not exceedRs. 2,50,000, tax is not
required to be deducted.

(2) TDS to be deducted where total value of supply under the contract exceedRs. 2,50,000 :
Being an inter-State supply of goods, supply of air-conditioner to GST Department in Delhi is
subject to IGST @ 12%. Therefore, total value of taxable supply [excluding IGST] under the
contract is as follows:

=Rs. 2,55,000

Since the total value of supply under the contract exceedRs. 2,50,000, tax is required to be
deducted.

(3) TDS to be deducted where total value of supply under the contract exceedRs. 2,50,000 :
Being an intra-State supply of services, supply of Generator renting service to Municipal
Corporation of Jaipur is subject to CGST and SGST @ 6% each. Therefore, total value of
taxable supply [excluding CGST and SGST] under the contract is as follows:

=Rs. 3,50,000 × 100/112

=Rs. 312500

Since the total value of supply under the contract exceedRs. 2,50,000, tax is required to be
deducted.

(8 Marks)

Ans-2

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Every Electronic Commerce Operator (ECO), not being an agent, is liable to collect tax at
source (TCS).

Such ECO is required to submit a registration application in prescribed form through the
common portal. The proper officer shall, after due verification, grant registration within 3
working days from the date of the application. On a request or upon an enquiry or pursuant
to any other proceeding under GST law, if the proper officer is satisfied that a person is no
longer liable to collect the tax at source, he may cancel his registration.

Such ECO shall furnish a monthly statement in prescribed form containing the details of the
outward supplies of goods and/ or services effected through it, including supplies returned
through it and the amount collected by it as TCS during the month within 10 days after the
end of each month in which tax has been collected at source.

They also required to file annual statement4 on or before 31st December following the end
of the financial year.

The TCS amount collected by the ECO has to be deposited by 10th of the month succeeding
the month in which TCS has been collected.

(5 Marks)

Ans-3

In case of intra-State supply of goods by a supplier to a PSU,

TDS @ 1% each under CGST and SGST is liable to be deducted by PSU only when the total
value of supply under a contract exceeds Rs. 2,50,000 (exclusive of tax & cess), from the
payment made or credited to the supplier.

Accordingly, in the given case, since the value of supply under the contract excluding taxes
and cesses isRs. 11,50,000 (` 13,57,000 × 100/118),

TDS @ 1% on payment of each of the instalment of Rs. 2,30,000 (` 11,50,000/5),

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i.e.Rs. 2,300 each under CGST and SGST is to be deducted even though the individual
payment is less thanRs. 2,50,000.

The amount of TDS deducted shall be paid to the Government by the deductor within 10
days after the end of the month in which such deduction is made or by 10th of the
succeeding month.

(5 Marks)

Ans-4

A Public Sector Undertaking is required to deduct tax @ 2% (on inter-State supplies) from
payment made to the supplier of taxable services where the total value of such supply,
excluding tax indicated in the invoice, under a contract, exceeds Rs. 2,50,000.

Value of supplies excluding tax are

Rs. 10,50,000 (Rs. 12,39,000 × 100/118) and

Rs. 15,50,000 (Rs. 18,39,000 × 100/118)

Further, in the given case, since the location of supplier is Maharashtra and place of supply
of services provided by Mr. A to BSA Corporation is the location of recipient, viz. Karnataka,
said services provided at both Mumbai and Bengaluru events are inter -State supplies.

Accordingly, in the given case, BSA Corporation is required to deduct tax as follows:

(i) Rs. 10,50,000 × 2% = Rs. 21,000 (IGST)

(ii) Rs. 15,50,000 × 2% = Rs. 31,000 (IGST)

(6 Marks)

Ans-5

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(i) An electronic commerce operator (ECO) is required to collect TCS - an amount @ 0.5%
(CGST 0.25% and SGST @ 0.25%) of the net value of taxable supplies made through it by
other suppliers. Hence, the amount of tax to be collected at source = ` 1,50,000 × 0.25% = `
375 (CGST) and ` 375 (SGST).

(ii) As per section 51 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017, State
Government department is required to deduct CGST @ 1% [Effective tax 2% (1% CGST + 1%
SGST/UTGST)] or IGST @ 2% from the payment made/credited to the supplier (deductee) of
taxable goods or services or both, where the total value of such supply, under a contract,
exceeds ` 2,50,000. If the contract is made for both taxable supply and exempted supply, tax
shall be deducted if the total value of taxable supply in the contract exceeds ` 2,50,000.
Since the location of the supplier and place of supply is in the same state, hence the supply
being intra-State supply, tax is to be deducted as follows :

= ` (4,30,000 - 1,00,000) × 1% = ` 3,300 (CGST) and ` 3,300 (SGST).

(iii) Proviso to section 51(1) of the CGST Act, 2017 stipulates that no tax shall be deducted if
the location of the supplier and the place of supply is in a State or Union territory which is
different from the State or as the case may be, Union territory of registration of the
recipient. Since, in the given case, the location of supplier and place of supply are in the
same State, i.e., Kerala and location of recipient is in Andhra Pradesh, Andhra Pradesh
Government is not required to deduct TDS although the total value of supply under the
contract is more than ` 2,50,000.

(6 Marks)

Ans-6 MCQ Answer

1.b) TDS is deducted only on the taxable value, excluding GST.

Reason:

Under GST, TDS is deducted on the taxable value of supply, excluding GST.

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1. In this case, the taxable value of supply is Rs.20 lakh. GST at 18% (Rs.3.6 lakh) is excluded
for TDS calculation.
2. TDS is calculated as 2% of Rs.20 lakh = Rs.40,000.
3. The recipient deducts TDS and deposits it in the Government account by the 10th of the
following month.
4. The TDS amount is credited to the supplier's electronic cash ledger, which the supplier
can use for tax payments or other liabilities.
This mechanism ensures compliance and transparency in tax collection while avoiding
double taxation on the GST component.

2. B) E-commerce operators only facilitate the supply of goods and services and collect
payment on behalf of the actual suppliers.

Reason:

E-commerce operators act as intermediaries in the supply chain:

1.They provide a platform where consumers can browse goods/services offered by actual
suppliers.

2.The actual suppliers fulfill the consumer's order, but the operator collects the payment
from the consumer.

3.After deducting commission and incidental expenses, the operator transfers the remaining
consideration to the actual supplier.

4.GST Compliance: E-commerce operators may have specific responsibilities, such as

deducting TCS (Tax Collected at Source) or facilitating GST compliance, but they are not
deemed suppliers themselves unless they supply goods/services directly.

This setup ensures that the actual supplier remains accountable for the supply, while the e-
commerce operator acts as a facilitator in the transaction.

3. B) Rs.5.00

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Reason:

Under GST, e-commerce operators are required to collect Tax Collection at Source (TCS) at
a rate of 1% (0.5% CGST + 0.5% SGST for intra-State or 1% IGST for inter-State) on the net
taxable value of goods/services supplied through their platform.

1. Net taxable value: Rs.1,000 (Excluding GST, as TCS is calculated on the pre-tax
amount).
2. TCS rate for inter-State supply: 0.5% IGST (applicable here).
3. TCS amount: 0.5% of Rs.1,000 = Rs.5.

The operator collects Rs.5 as TCS and deposits it with the Government. The TCS reflects in
the supplier’s electronic cash ledger, ensuring accountability in the GST framework.

4. a) ₹6,600 (CGST + SGST)

Reason:

1.Taxable Value: The total contract value is ₹4,30,000, out of which ₹1,00,000 is exempt.
Therefore, the taxable value is
₹4,30,000−₹1,00,000=₹3,30,000₹4,30,000−₹1,00,000=₹3,30,000

2.TDS Rate: As per Section 51 of the CGST Act, 2017, the Government deducts TDS at 1%
each for CGST and SGST (total 2%) on the taxable value of the supply.

TDS Calculation:

TDS=2% of ₹3,30,000=₹6,600TDS=2% of ₹3,30,000=₹6,600

CGST TDS: 1% of ₹3,30,000 = ₹3,300

SGST TDS: 1% of ₹3,30,000 = ₹3,300

Total TDS: ₹3,300 + ₹3,300 = ₹6,600

4.Exempt Supply: TDS is not applicable on the exempt portion of the supply (₹1,00,000).

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Thus, the correct answer is (A) ₹6,600 (CGST + SGST).

Key Points:

 TDS is applicable only on the taxable portion of the supply.

 The exempt portion of the supply is excluded from TDS calculation.
 The TDS rate is 1% each for CGST and SGST (total 2%) under Section 51 of the CGST Act,
2017.

5. c) TDS @ 1% each under CGST and SGST is applicable on each instalment, and the
deducted amount must be deposited to the Government within 10 days after the end of
the month in which the deduction is made.

Reason:

1. Applicability of TDS:
o As per Section 51 of the CGST Act, 2017, TDS is applicable when the total value of supply

under a contract exceeds ₹2,50,000 (exclusive of tax).

o In this case, the total value of supply (excluding GST) is:

₹13,57,000×100118=₹11,50,000₹13,57,000×118100=₹11,50,000

Since ₹11,50,000 exceeds ₹2,50,000, TDS is applicable.

o TDS is deducted at 1% each under CGST and SGST on the taxable value of each
instalment.
2. Calculation of TDS:

o Each instalment (excluding GST) = ₹11,50,000 ÷ 5 = ₹2,30,000.

o TDS on each instalment = 1% of ₹2,30,000 = ₹2,300 each under CGST and SGST.
3. Timeline for Depositing TDS:

o As per Rule 66 of the CGST Rules, 2017, the deducted TDS must be deposited to the
Government within 10 days after the end of the month in which the deduction is made.

Thus, the correct answer is (C).

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Key Points:

 TDS is applicable when the total value of supply under a contract exceeds ₹2,50,000
(exclusive of tax).
 TDS is deducted at 1% each under CGST and SGST on the taxable value of each instalment.
 The deducted TDS must be deposited to the Government within 10 days after the end of
the month in which the deduction is made.

(1×5 = 5 Marks)

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