CA Inter Taxation MCQ Test 12 (Income-tax + GST): answer key

Question 1 · 2 marks · Capital Gains · medium

Scenario. Mr. Raghav Mehta, a resident individual aged 48, opts out of the default tax regime under section 115BAC. During the previous year 2025-26 he transferred the following capital assets. On 12.05.2025 he sold 30,000 listed equity shares of Zenova Ltd. for Rs. 18,00,000. These shares were acquired on 20.06.2019 for Rs. 6,00,000. STT was paid on both acquisition and sale. Brokerage at 0.5% of sale consideration was paid. On 10.09.2025 he sold a plot of land at Pune for Rs. 95,00,000. It was acquired on 15.03.2018 for Rs. 40,00,000. The stamp duty value on the date of agreement, 08.08.2025, was Rs. 1,02,00,000; on the date of registration it was Rs. 1,08,00,000. Mr. Mehta received Rs. 5,00,000 by account payee cheque on 08.08.2025 from the buyer. No other amount was received before registration. On 20.01.2026 he sold 5,000 shares allotted under an ESOP by his employer, Zenova Ltd., for Rs. 7,50,000. He had paid Rs. 1,50,000 on exercise on 01.07.2023. The fair market value on the date of exercise, taken for perquisite valuation under section 17(2)(vi), was Rs. 4,00,000. These shares were listed; STT was paid on sale but not on allotment. He also sold rural agricultural land in Rajasthan for Rs. 12,00,000 on 22.02.2026; it was acquired in 2012 for Rs. 3,00,000. The land is outside any municipality or cantonment board and is not within the specified aerial distance limits. He has no other capital gains. CII: 2018-19 = 280; 2025-26 = 376.

Assuming Mr. Mehta's basic exemption limit is fully exhausted against other income, what is the tax on the listed equity shares under section 112A, including health and education cess at 4%?

1. Rs. 1,33,250, since the threshold exemption of Rs. 1,25,000 is applied and cess is ignored on special-rate gains.
2. Rs. 1,38,580, since LTCG of Rs. 11,91,000 is reduced by Rs. 1,25,000 and the balance is taxed at 12.5% plus cess. (correct answer)
3. Rs. 1,48,875, since the entire LTCG of Rs. 11,91,000 is taxed at 12.5% without the Rs. 1,25,000 threshold.
4. Rs. 1,25,000, since section 112A exempts the first Rs. 1,25,000 and the remaining gain is taxed only at 10% plus cess.

Answer: B — Rs. 1,38,580, since LTCG of Rs. 11,91,000 is reduced by Rs. 1,25,000 and the balance is taxed at 12.5% plus cess.

Working. Sale 18,00,000 - brokerage 9,000 = 17,91,000. LTCG = 17,91,000 - 6,00,000 = 11,91,000. Taxable = 11,91,000 - 1,25,000 = 10,66,000. Tax = 10,66,000 x 12.5% = 1,33,250. Cess = 5,330. Total = 1,38,580.

Explanation. Section 112A taxes LTCG on listed equity shares with STT paid on acquisition and transfer at 12.5% only on the amount exceeding Rs. 1,25,000. The net sale consideration is Rs. 17,91,000 after brokerage of Rs. 9,000, so LTCG is Rs. 11,91,000. Tax is 12.5% of Rs. 10,66,000, plus 4% cess. The tempting option a applies the threshold but ignores cess.

Where it goes wrong. Ignoring cess or taxing the whole gain without the section 112A threshold.

Authority. Section 112A; Section 48; Chapter 3 Unit 4

Question 2 · 2 marks · Capital Gains · hard

What is the full value of consideration for the Pune land under section 50C and the long-term capital gain to be included in gross total income before any exemption?

1. Rs. 1,02,00,000 and Rs. 62,00,000, because the stamp duty value on the agreement date is adopted whenever it exceeds the actual consideration.
2. Rs. 1,08,00,000 and Rs. 68,00,000, because the stamp duty value on registration is always adopted if it is higher than the agreement value.
3. Rs. 95,00,000 and Rs. 55,00,000, because the agreement-date stamp duty value does not exceed 110% of actual consideration and payment was made by account payee cheque. (correct answer)
4. Rs. 95,00,000 and Rs. 41,28,571, because indexed cost of acquisition is deducted while computing income under the head Capital Gains.

Answer: C — Rs. 95,00,000 and Rs. 55,00,000, because the agreement-date stamp duty value does not exceed 110% of actual consideration and payment was made by account payee cheque.

Working. Actual consideration = 95,00,000. 110% = 1,04,50,000. Agreement SDV = 1,02,00,000, which is not above 1,04,50,000. FVC = 95,00,000. LTCG = 95,00,000 - 40,00,000 = 55,00,000.

Explanation. Under section 50C, the agreement-date stamp duty value can be used when part consideration is paid by account payee cheque before the agreement. Here Rs. 1,02,00,000 does not exceed 110% of Rs. 95,00,000, so actual consideration is the full value. Indexation is not allowed while computing income under the head Capital Gains; it is relevant only for tax under section 112.

Where it goes wrong. Using registration-date stamp duty value or deducting indexed cost in the head computation.

Authority. Section 50C; Section 48; Chapter 3 Unit 4

Question 3 · 2 marks · Capital Gains · hard

What is the total tax under section 112, including cess at 4%, on the Pune land and the ESOP shares, assuming no basic exemption adjustment and that Mr. Mehta claims the option most beneficial to him for the land?

1. Rs. 7,60,500, computed at 12.5% on land gain without indexation and on ESOP gain, plus 4% cess. (correct answer)
2. Rs. 9,04,243, computed at 20% with indexation on land gain and at 12.5% on ESOP gain, plus 4% cess.
3. Rs. 7,31,250, computed at 12.5% on both gains, since health and education cess is not added to special-rate tax.
4. Rs. 6,87,500, computed only on the land gain, since ESOP shares are always exempt under section 10(10D).

Answer: A — Rs. 7,60,500, computed at 12.5% on land gain without indexation and on ESOP gain, plus 4% cess.

Working. Land LTCG = 95,00,000 - 40,00,000 = 55,00,000. Tax at 12.5% = 6,87,500. Indexed cost = 40,00,000 x 376/280 = 53,71,429; indexed gain = 41,28,571; tax at 20% = 8,25,714; 12.5% option is lower. ESOP cost = 4,00,000; gain = 3,50,000; tax at 12.5% = 43,750. Total tax = 7,31,250; cess = 29,250; total = 7,60,500.

Explanation. For resident individuals, land or building acquired before 23.07.2024 can be taxed at 12.5% without indexation or 20% with indexation, whichever is beneficial. On the given figures, the 12.5% option is lower. ESOP shares do not qualify for section 112A because STT was not paid on acquisition; cost is the perquisite FMV under section 49(2AA). Tax is 12.5% plus cess.

Where it goes wrong. Using indexation for land or treating ESOP shares as section 112A shares.

Authority. Section 112; Section 49(2AA); Section 17(2)(vi); Section 48; Chapter 3 Unit 4

Question 4 · 2 marks · Income from Other Sources · medium

Scenario. Mr. Aditya Verma, a resident individual aged 44, exercises the option of shifting out of the default tax regime under section 115BAC. His wife, Mrs. Sneha Verma, is a homemaker and has no professional qualification. Their minor son Kabir, aged 10, and minor daughter Ira, aged 7, live with them. During the previous year 2025-26, Aditya received a cash gift of Rs. 80,000 from his friend on 12.06.2025. His mother gifted him a plot of land on 15.07.2025; its stamp duty value was Rs. 18,00,000. No consideration was paid. Sneha received remuneration of Rs. 1,20,000 from Riya Traders, a partnership firm in which Aditya has 30% profit share. The remuneration was not attributable to any technical or professional knowledge of Sneha. Aditya transferred Rs. 5,00,000 to Sneha on 01.04.2025 without consideration. She invested it in a bank fixed deposit at 9% p.a. and earned interest of Rs. 45,000 during the year. She reinvested that interest in another deposit and earned Rs. 4,000 on it. Kabir won Rs. 2,00,000 in a national painting competition. He deposited the prize in a bank fixed deposit and earned interest of Rs. 15,000. He also received a cash gift of Rs. 20,000 from a non-relative. Ira received a cash gift of Rs. 40,000 from a non-relative. Aditya's income before clubbing is Rs. 12,00,000; Sneha's income before clubbing, excluding the remuneration, is Rs. 6,00,000. No other income. Both Aditya and Sneha satisfy conditions for section 10(32) exemption.

What amount is chargeable as income from other sources in Mr. Aditya Verma's hands under section 56(2)(x) for the gifts received by him?

1. Rs. 18,80,000, since both the cash gift from the friend and the plot from his mother are taxable at stamp duty value.
2. Rs. 18,00,000, since the plot from his mother is taxable but the cash gift from a friend is below the basic exemption limit.
3. Nil, since gifts from a friend and from a mother are both exempt from tax under section 56(2)(x) in all cases.
4. Rs. 80,000, since the cash gift exceeds Rs. 50,000 while the plot from his mother is exempt as a gift from a relative. (correct answer)

Answer: D — Rs. 80,000, since the cash gift exceeds Rs. 50,000 while the plot from his mother is exempt as a gift from a relative.

Working. Cash from friend = 80,000, taxable because it exceeds 50,000. Plot from mother = exempt because mother is a relative. Taxable amount = 80,000.

Explanation. A cash gift from a non-relative is taxable under section 56(2)(x) if the aggregate exceeds Rs. 50,000. A plot received from a mother is exempt because a lineal ascendant is a relative. The stamp duty value of the plot is not taxed in Aditya's hands. The tempting option b wrongly treats the mother's gift as taxable.

Where it goes wrong. Taxing the plot received from a relative or ignoring the Rs. 50,000 threshold.

Authority. Section 56(2)(x); Chapter 3 Unit 5

Question 5 · 2 marks · Income from Other Sources and Clubbing · hard

How much of Mrs. Sneha Verma's remuneration from Riya Traders is includible in Mr. Aditya Verma's total income under section 64(1)(ii)?

1. Nil, since remuneration for services actually rendered by the spouse is never clubbed with the individual's income.
2. Rs. 1,20,000, since Aditya has substantial interest in the firm and Sneha has no technical or professional qualification for the remuneration. (correct answer)
3. Rs. 36,000, being 30% of the remuneration, because Aditya's profit share in the firm is 30%.
4. Rs. 1,20,000, since remuneration from a firm is always clubbed with the income of the higher-earning spouse irrespective of the firm's profit share or qualification.

Answer: B — Rs. 1,20,000, since Aditya has substantial interest in the firm and Sneha has no technical or professional qualification for the remuneration.

Working. Aditya's profit share = 30%, which is at least 20%, so substantial interest exists. Sneha has no technical or professional qualification. Remuneration of 1,20,000 is fully clubbed under section 64(1)(ii).

Explanation. Section 64(1)(ii) clubs remuneration received by a spouse from a concern in which the individual has substantial interest. Aditya has a 30% profit share, which is substantial interest. Sneha has no technical or professional qualification, so the exception does not apply. The full Rs. 1,20,000 is clubbed, not only 30% of it.

Where it goes wrong. Clubbing only the 30% profit share or ignoring the qualification exception.

Authority. Section 64(1)(ii); Chapter 4

Question 6 · 2 marks · Income from Other Sources and Clubbing · hard

What amount of the minor children's income is to be clubbed in Mr. Aditya Verma's total income after allowing exemption under section 10(32)?

1. Rs. 13,500, being Kabir's fixed deposit interest of Rs. 15,000 less Rs. 1,500, while his prize and small gifts are not clubbed. (correct answer)
2. Rs. 2,33,500, being Kabir's prize, interest and gifts plus Ira's gift, less Rs. 1,500 for each child.
3. Rs. 15,000, being the whole interest earned by Kabir, since section 10(32) is not available to a parent who opts out.
4. Nil, since all income of a minor child is exempt under section 10(32) up to Rs. 1,500 per child and the rest is taxed in the child's hands.

Answer: A — Rs. 13,500, being Kabir's fixed deposit interest of Rs. 15,000 less Rs. 1,500, while his prize and small gifts are not clubbed.

Working. Kabir prize = 2,00,000, not clubbed. Kabir interest = 15,000, clubbed. Gifts 20,000 and 40,000 are below 50,000 each, so not taxable. Exemption = 1,500. Clubbed amount = 15,000 - 1,500 = 13,500.

Explanation. Income from a minor's skill or talent is not clubbed, so Kabir's Rs. 2,00,000 prize is excluded. Interest earned on a deposit made out of that prize is clubbed. Cash gifts of Rs. 20,000 and Rs. 40,000 are each below the Rs. 50,000 threshold and are not taxable. Section 10(32) gives Rs. 1,500 exemption.

Where it goes wrong. Clubbing the talent prize or ignoring the interest on the deposit made from it.

Authority. Section 64(1A); Section 10(32); Chapter 4; Chapter 3 Unit 5

Question 7 · 2 marks · TDS and TCS · hard

Scenario. Vardhman Retail Ltd. had turnover of Rs. 11.50 crore in F.Y. 2024-25. During F.Y. 2025-26 it purchased goods from Mr. Suresh, a resident wholesaler, for Rs. 62,00,000. Payments were Rs. 20,00,000 on 10.06.2025, Rs. 25,00,000 on 05.09.2025 and Rs. 17,00,000 on 20.12.2025. Mr. Suresh did not furnish his PAN. No other purchase was made from him, and Vardhman Retail Ltd. is not required to deduct tax under any other provision on these purchases.

What is the correct amount of tax deductible at source under section 194Q on the payment of Rs. 17,00,000 made on 20.12.2025, if Mr. Suresh has not furnished his PAN?

1. Rs. 1,200, since section 194Q requires deduction at 0.1% of the amount exceeding Rs. 50,00,000 even when PAN is absent.
2. Rs. 1,700, since 0.1% is applied to the whole payment of Rs. 17,00,000 that crosses the threshold.
3. Nil, since purchases from a resident wholesaler are outside section 194Q when the buyer is a company.
4. Rs. 60,000, since section 206AA requires deduction at 5% of the amount exceeding Rs. 50,00,000 when PAN is not furnished. (correct answer)

Answer: D — Rs. 60,000, since section 206AA requires deduction at 5% of the amount exceeding Rs. 50,00,000 when PAN is not furnished.

Working. Purchases = 62,00,000. Excess over 50,00,000 = 12,00,000. No PAN, so section 206AA rate for 194Q = 5%. TDS = 5% x 12,00,000 = 60,000.

Explanation. Section 194Q applies because Vardhman's turnover exceeded Rs. 10 crore and purchases from Mr. Suresh exceeded Rs. 50 lakh. The excess is Rs. 12,00,000. Since PAN is not furnished, section 206AA raises the rate for section 194Q to 5%, giving Rs. 60,000. Option a uses the normal 0.1% rate despite the missing PAN.

Where it goes wrong. Using the normal 0.1% rate when PAN is absent or taxing the entire payment.

Authority. Section 194Q; Section 206AA; Chapter 7

Question 8 · 1 marks · Advance Tax · medium

Scenario. Mr. Omkar, a resident individual aged 52, carries on a retail business and opts for presumptive taxation under section 44AD(1). For F.Y. 2025-26, his estimated tax liability is Rs. 1,40,000 and tax deducted at source is Rs. 20,000. He has no other income and no tax credit or relief.

What is the amount and due date of the advance tax instalment payable by Mr. Omkar for F.Y. 2025-26?

1. Rs. 54,000 by 15.09.2025, since 45% of the net liability is payable by that date for all assessees.
2. Rs. 18,000 by 15.06.2025, since 15% of the net liability is payable in the first instalment under section 211.
3. Rs. 1,20,000 by 15.03.2026, since a section 44AD assessee pays the whole advance tax in one instalment by that date. (correct answer)
4. Nil, since tax deducted at source of Rs. 20,000 exceeds the threshold of Rs. 10,000 for advance tax.

Answer: C — Rs. 1,20,000 by 15.03.2026, since a section 44AD assessee pays the whole advance tax in one instalment by that date.

Working. Tax liability = 1,40,000. Less TDS = 20,000. Net advance tax = 1,20,000. Due date for section 44AD(1) assessee = 15.03.2026.

Explanation. An eligible assessee opting for section 44AD(1) pays the whole advance tax in one instalment on or before 15 March of the financial year. The net liability is Rs. 1,40,000 less TDS of Rs. 20,000, i.e. Rs. 1,20,000. The four-instalment schedule does not apply to such an assessee.

Where it goes wrong. Applying the four-instalment schedule to a section 44AD assessee.

Authority. Section 44AD(1); Section 211; Chapter 7

Question 9 · 2 marks · Place of Supply · hard

Scenario. Suryansh Retail LLP (SRL) is registered in Jaipur, Rajasthan. It deals in home appliances and event support. During 2025-26 it enters into the following transactions. (1) Meera Enterprises, registered in Ahmedabad, Gujarat, orders 20 washing machines from SRL. SRL raises the invoice on Meera and, as per Meera's written direction, delivers the machines to Kavach Hotels in Udaipur, Rajasthan. (2) SRL sells a 'festive kitchen set' to Aarohi Stores, registered in Kota, Rajasthan, for a single price of Rs. 8,400. The set contains a mixer grinder, a non-stick pan and an insulated bottle, which are also sold separately; the applicable GST rates are 18%, 12% and 5%. (3) Nirvaan Sports Foundation, registered in Delhi, engages SRL to organise a sports event held in Goa and Maharashtra. The contract gives a consolidated fee of Rs. 12,00,000 and specifies State-wise allocation of Rs. 7,00,000 for Goa and Rs. 5,00,000 for Maharashtra. (4) SRL trains 30 employees of Prakash Ltd, registered in Gujarat, at SRL's Jaipur centre; Prakash Ltd pays Rs. 1,50,000. (5) SRL supplies an air conditioner with mandatory installation and two-year maintenance for a single price of Rs. 65,000 to a customer in Ajmer, Rajasthan; the air conditioner alone is taxable at 28%, while installation and maintenance are taxable at 18%. (6) SRL also runs an ordinary restaurant in Jaipur and lists it on FoodNest, an electronic commerce operator. FoodNest collects the payment from customers and pays SRL after commission; the restaurant is not at specified premises. All amounts are exclusive of GST unless stated. SRL wants to know the correct GST position on these transactions for compliance.

For transaction (1), what is the place of supply in the supply from SRL to Meera Enterprises and the tax treatment?

1. Place of supply is Udaipur because the machines are delivered there, so CGST and SGST are payable.
2. Place of supply is Jaipur because SRL dispatches the machines from Rajasthan, so CGST and SGST are payable.
3. Place of supply is Ahmedabad, being Meera's principal place of business, so IGST is payable. (correct answer)
4. Place of supply is Udaipur, but IGST is payable because Meera is registered in Gujarat.

Answer: C — Place of supply is Ahmedabad, being Meera's principal place of business, so IGST is payable.

Working. No arithmetic. Supplier Rajasthan; deemed recipient Meera in Gujarat; place of supply Gujarat; inter-State supply; IGST.

Explanation. Under section 10(1)(b) of the IGST Act, where goods are delivered to a person on the direction of a third person, the third person is deemed to have received the goods and the place of supply is the principal place of business of that third person. Meera is the third person and is registered in Ahmedabad, so IGST applies as SRL is in Rajasthan. Delivery at Udaipur does not fix the place of supply.

Where it goes wrong. Delivery destination is tempting, but the bill-to-ship-to rule uses the third person's principal place of business.

Authority. Section 10(1)(b) of the IGST Act, 2017

Question 10 · 2 marks · Supply under GST · medium

For transaction (2), what is the GST rate and amount of tax on the festive kitchen set priced at Rs. 8,400?

1. GST at 5% on Rs. 8,400, amounting to Rs. 420, because the lowest-rated item governs a package.
2. GST at 18% on Rs. 8,400, amounting to Rs. 1,512, because a mixed supply is taxed at the highest rate. (correct answer)
3. GST at 12% on Rs. 8,400, amounting to Rs. 1,008, because the pan is the principal item in the set.
4. GST at 18% on Rs. 5,400, amounting to Rs. 972, because only the mixer is taxable at the highest rate.

Answer: B — GST at 18% on Rs. 8,400, amounting to Rs. 1,512, because a mixed supply is taxed at the highest rate.

Working. Rs. 8,400 x 18% = Rs. 1,512.

Explanation. The set is a mixed supply under section 2(74): two or more individual supplies are made for a single price and the items are also sold separately, so they are not naturally bundled. Under section 8(b), a mixed supply is taxed at the rate of the supply attracting the highest rate. The highest rate is 18%, so tax is Rs. 8,400 x 18% = Rs. 1,512.

Where it goes wrong. The lowest or middle rate is tempting if the set is wrongly treated as a composite supply.

Authority. Section 2(74) of the CGST Act, 2017; Section 8(b) of the CGST Act, 2017

Question 11 · 2 marks · Place of Supply · hard

For transaction (3), what is the place of supply and the tax treatment of the event organisation fee?

1. Place of supply is Delhi; IGST is payable on the full Rs. 12,00,000 without State-wise apportionment. (correct answer)
2. Place of supply is Goa and Maharashtra; CGST and SGST are payable on Rs. 7,00,000 and Rs. 5,00,000 respectively.
3. Place of supply is Delhi; CGST and SGST are payable because the foundation is registered in Delhi.
4. Place of supply is Goa and Maharashtra; IGST is payable on the full amount without apportionment.

Answer: A — Place of supply is Delhi; IGST is payable on the full Rs. 12,00,000 without State-wise apportionment.

Working. No apportionment. Supplier Rajasthan; registered recipient Delhi; place of supply Delhi; inter-State supply; IGST.

Explanation. For organisation of an event supplied to a registered person, section 12(7) of the IGST Act fixes the place of supply at the location of the registered recipient. Nirvaan is registered in Delhi, so the place of supply is Delhi. The State-wise allocation for Goa and Maharashtra is irrelevant for a registered recipient. SRL is in Rajasthan, so the supply is inter-State and IGST applies.

Where it goes wrong. The event locations and State-wise allocation are tempting, but they matter for an unregistered recipient.

Authority. Section 12(7) of the IGST Act, 2017; Section 7(3) of the IGST Act, 2017

Question 12 · 2 marks · Place of Supply · medium

For transaction (4), what is the place of supply of the training service and the resulting tax?

1. Jaipur, because training is actually performed at SRL's centre, so CGST and SGST are payable.
2. Jaipur, because the employees physically receive the training there, so IGST is payable.
3. Gujarat, because the recipient is registered there, so CGST and SGST are payable.
4. Gujarat, because the recipient is registered there, so IGST is payable. (correct answer)

Answer: D — Gujarat, because the recipient is registered there, so IGST is payable.

Working. Supplier Rajasthan; registered recipient Gujarat; place of supply Gujarat; inter-State supply; IGST.

Explanation. Under section 12(5)(a) of the IGST Act, training and performance appraisal services supplied to a registered person have their place of supply at the location of that registered person. Prakash Ltd is registered in Gujarat, so the place of supply is Gujarat. SRL is in Rajasthan, making it an inter-State supply taxable under IGST, even though the training is performed in Jaipur.

Where it goes wrong. The place of performance is tempting, but for a registered recipient the location of the recipient governs.

Authority. Section 12(5)(a) of the IGST Act, 2017

Question 13 · 2 marks · Supply under GST · hard

For transaction (5), how is GST charged on the single price of Rs. 65,000?

1. GST at 18% on Rs. 65,000, amounting to Rs. 11,700, because installation and maintenance are separate services.
2. GST at 28% on Rs. 52,000 and 18% on Rs. 13,000, because each component must be taxed separately.
3. GST at 28% on Rs. 65,000, amounting to Rs. 18,200, because it is a composite supply of the air conditioner. (correct answer)
4. GST at 18% on Rs. 65,000, amounting to Rs. 11,700, because maintenance is the dominant element.

Answer: C — GST at 28% on Rs. 65,000, amounting to Rs. 18,200, because it is a composite supply of the air conditioner.

Working. Rs. 65,000 x 28% = Rs. 18,200.

Explanation. The air conditioner, mandatory installation and maintenance are naturally bundled and supplied for a single price. This is a composite supply under section 2(30), and the air conditioner is the principal supply under section 2(90). Under section 8(a), the entire composite supply is treated as the principal supply and taxed at 28%. Tax is Rs. 65,000 x 28% = Rs. 18,200.

Where it goes wrong. Splitting the price between goods and services is tempting, but a composite supply follows the principal supply.

Authority. Section 2(30) of the CGST Act, 2017; Section 2(90) of the CGST Act, 2017; Section 8(a) of the CGST Act, 2017

Question 14 · 2 marks · Charge of GST · medium

For transaction (6), who is liable to pay GST on the restaurant service supplied through FoodNest, and why?

1. SRL, because it actually supplies the restaurant service from its Jaipur restaurant to customers.
2. FoodNest, because section 9(5) makes the operator liable for notified restaurant service not at specified premises. (correct answer)
3. SRL, because FoodNest is only a payment collection agent and cannot be treated as supplier.
4. FoodNest, because it must collect TCS and that TCS discharges the entire GST liability.

Answer: B — FoodNest, because section 9(5) makes the operator liable for notified restaurant service not at specified premises.

Working. No arithmetic. Restaurant not at specified premises; ECO liable under section 9(5).

Explanation. Restaurant service supplied through an electronic commerce operator is notified under section 9(5) of the CGST Act, except where the restaurant is located at specified premises. SRL's restaurant is not at specified premises, so FoodNest is treated as the supplier liable to pay GST. TCS under section 52 is separate and does not discharge the GST liability on the restaurant service.

Where it goes wrong. The actual restaurant is tempting, but section 9(5) shifts the liability to the operator for notified services.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017 CT (R) dated 28.06.2017 as amended

Question 15 · 2 marks · TDS and TCS · hard

Scenario. Ganga Projects Ltd is a public sector undertaking registered in Delhi. It awards a contract to Orbit Security Services, registered in Haryana, for supply of security personnel at Ganga's office in Delhi. The contract value is Rs. 5,40,000, excluding GST, and the place of supply is Delhi. Orbit raises an invoice for Rs. 6,37,200 including GST at 18%. Ganga pays the invoice in November 2026. Ganga is notified for TDS under section 51.

What is the correct tax deduction at source by Ganga Projects Ltd on the payment to Orbit Security Services?

1. No TDS, because the supplier is registered in Haryana while the recipient is registered in Delhi.
2. TDS of Rs. 5,400 under CGST and Rs. 5,400 under SGST, because the place of supply is Delhi.
3. TDS of Rs. 12,744 under IGST, because TDS is computed on the invoice value including GST.
4. TDS of Rs. 10,800 under IGST, because the supplier is in Haryana and the place of supply is Delhi. (correct answer)

Answer: D — TDS of Rs. 10,800 under IGST, because the supplier is in Haryana and the place of supply is Delhi.

Working. TDS base = Rs. 5,40,000. IGST TDS = Rs. 5,40,000 x 2% = Rs. 10,800.

Explanation. Ganga is a public sector undertaking notified for TDS under section 51. The value for TDS excludes GST, so it is Rs. 5,40,000. The supplier is in Haryana and the place of supply is Delhi, so the supply is inter-State and TDS is under IGST at 2%, i.e. Rs. 10,800. The no-TDS proviso does not apply because the place of supply is in the recipient's State.

Where it goes wrong. The supplier's State is tempting for the no-TDS exception, but the place of supply is in the recipient's State.

Authority. Section 51 of the CGST Act, 2017; Section 20 of the IGST Act, 2017

Question 16 · 1 marks · E-way Bill · hard

Scenario. Rudra Traders, registered in Madhya Pradesh, sells TMT bars to Sagar Infra, registered in Maharashtra, for Rs. 46,000 excluding GST. GST at 18% is charged separately. Rudra also charges Rs. 3,500 as freight in the same invoice and arranges the transporter. The goods move by road from Indore to Pune. Rudra asks whether an e-way bill is required.

Is Rudra Traders required to generate an e-way bill for the movement, and why?

1. Yes, because the consignment value is Rs. 58,410, which exceeds Rs. 50,000. (correct answer)
2. No, because the taxable value of the goods is only Rs. 46,000, below Rs. 50,000.
3. No, because freight is a separate service and is excluded from consignment value.
4. Yes, because every inter-State movement of goods requires an e-way bill irrespective of value.

Answer: A — Yes, because the consignment value is Rs. 58,410, which exceeds Rs. 50,000.

Working. Rs. 46,000 + Rs. 3,500 = Rs. 49,500. GST = Rs. 49,500 x 18% = Rs. 8,910. Consignment value = Rs. 58,410.

Explanation. Consignment value is the value under section 15 as declared in the invoice and includes the tax charged. Freight charged in the same invoice is part of that value. The value is Rs. 46,000 + Rs. 3,500 = Rs. 49,500, and with GST at 18% the consignment value is Rs. 58,410. Since it exceeds Rs. 50,000, an e-way bill is required for the inter-State movement.

Where it goes wrong. Using only the taxable value of goods or excluding freight is tempting but wrong.

Authority. Rule 138(1) of the CGST Rules, 2017