CA Inter Taxation MCQ Test 15 (Income-tax + GST): answer key

Question 1 · 2 marks · Chapter 3 Unit 1: Salaries · hard

Scenario. Raghav Menon, aged 44, is a resident individual employed with Meridian Traders Pvt. Ltd. in Mumbai and also runs a proprietorship, Menon Traders. He pays tax under the default regime under section 115BAC for A.Y. 2026-27. Salary particulars for P.Y. 2025-26 are: basic Rs. 82,000 per month; dearness allowance Rs. 18,000 per month, the entire amount forming part of retirement benefits; entertainment allowance Rs. 5,000 per month; commission Rs. 1,20,000; employer contribution to NPS Rs. 1,50,000. The employer provides rent-free unfurnished accommodation owned by it in Mumbai; no rent is recovered. It also provides a car of 1.8 litre engine with driver, used partly for official and partly for personal purposes, all running expenses being met by the employer. The employer paid Rs. 90,000 for medical treatment and stay abroad of Raghav and Rs. 25,000 for travel of Raghav and one attendant; RBI permits Rs. 1,00,000 for treatment and stay, and Raghav's gross total income before including this expenditure is above Rs. 8,00,000. Professional tax of Rs. 2,500 was paid by the employer. Menon Traders' net profit is Rs. 6,80,000 after debiting depreciation of Rs. 1,25,000, which includes additional depreciation of Rs. 40,000; depreciation allowable under the Act is Rs. 1,12,000. The profit also includes a cash payment of Rs. 40,000 to a goods transport operator, GST of Rs. 18,000 paid on 15 December 2026, and salary of Rs. 60,000 to Raghav's brother, of which Rs. 15,000 is unreasonable. No other adjustment is required.

What is Raghav's income chargeable under the head Salaries for A.Y. 2026-27 under the default regime?

1. Rs. 16,29,100, because the medical travel expenditure is fully exempt and the employer NPS contribution is excluded.
2. Rs. 16,54,100, because the taxable medical travel is added and standard deduction is Rs. 75,000. (correct answer)
3. Rs. 17,29,100, because the employer NPS contribution and standard deduction are both ignored.
4. Rs. 16,79,100, because the employer NPS is deducted before computing salary income.

Answer: B — Rs. 16,54,100, because the taxable medical travel is added and standard deduction is Rs. 75,000.

Working. Basic 9,84,000 + DA 2,16,000 + entertainment 60,000 + commission 1,20,000 + employer NPS 1,50,000 = 15,30,000. RFA 10% of 13,20,000 = 1,32,000. Car 3,300 x 12 = 39,600. Medical travel taxable 25,000. Professional tax 2,500. Gross salary 17,29,100. Less standard deduction 75,000 = 16,54,100.

Explanation. Gross salary includes basic, DA, entertainment allowance, commission, employer NPS, rent-free accommodation at 10% of salary of Rs. 13,20,000, car perquisite at Rs. 3,300 per month, taxable medical travel of Rs. 25,000 and professional tax paid by employer. Gross salary is Rs. 17,29,100; standard deduction under section 16(ia) is Rs. 75,000. Taxable salary is therefore Rs. 16,54,100. The medical treatment and stay are within the RBI limit, but travel is taxable because gross total income before that expenditure exceeds the Rule 3D limit.

Where it goes wrong. Adding the entire medical expenditure abroad or ignoring the Rule 3D gross total income limit gives a wrong figure.

Authority. section 17(2)(iii); Rule 3C; section 17(2)(iv); section 16(ia); Rule 3D

Question 2 · 2 marks · Chapter 3 Unit 3: Profits and Gains of Business or Profession · hard

What is Raghav's business income from Menon Traders for A.Y. 2026-27 under the default regime?

1. Rs. 7,51,000, because the cash transport payment is allowable up to Rs. 35,000 under Rule 6DD and the late GST payment is added back.
2. Rs. 7,26,000, because the additional depreciation is allowed and the transport payment is allowed.
3. Rs. 7,66,000, because book depreciation is replaced, and the cash transport, late GST and excess brother salary are disallowed. (correct answer)
4. Rs. 7,81,000, because only the excess over Rs. 35,000 of transport payment is disallowed.

Answer: C — Rs. 7,66,000, because book depreciation is replaced, and the cash transport, late GST and excess brother salary are disallowed.

Working. 6,80,000 + 1,25,000 - 1,12,000 + 40,000 + 18,000 + 15,000 = 7,66,000.

Explanation. Book depreciation of Rs. 1,25,000 is added back and depreciation of Rs. 1,12,000 is allowed, a net increase of Rs. 13,000. The cash payment of Rs. 40,000 to a transport operator exceeds the Rs. 35,000 limit and is disallowed. GST paid after the due date is disallowed under section 43B. The unreasonable salary to the brother is disallowed to the extent of Rs. 15,000. Business income is Rs. 7,66,000.

Where it goes wrong. The transport limit is Rs. 35,000 for a goods transport operator, not Rs. 10,000.

Authority. section 40A(3); section 43B; section 40A(2); section 32

Question 3 · 2 marks · Chapter 3 Unit 1: Salaries · hard

What amount of the medical expenditure met by the employer is taxable as a perquisite in Raghav's hands for A.Y. 2026-27?

1. Nil, because the whole expenditure is exempt as the treatment cost is within the RBI limit and he is a specified employee for perquisite purposes.
2. Rs. 1,15,000, because the entire expenditure on treatment, stay abroad and travel of the patient and attendant is a taxable perquisite in his hands.
3. Rs. 40,000, because travel expenditure exceeding Rs. 10,000 is taxable while treatment and stay abroad remain exempt within the RBI limit.
4. Rs. 25,000, because treatment and stay abroad are within the RBI limit, but travel is taxable since his gross total income exceeds Rs. 2,00,000. (correct answer)

Answer: D — Rs. 25,000, because treatment and stay abroad are within the RBI limit, but travel is taxable since his gross total income exceeds Rs. 2,00,000.

Working. Treatment and stay abroad: ₹90,000, within RBI limit of ₹1,00,000, hence exempt. Travel of Raghav and one attendant: ₹25,000; gross total income before including this expenditure exceeds ₹2,00,000, hence travel exemption is not available. Taxable perquisite = ₹25,000.

Explanation. Under the proviso to section 17(2), treatment and stay abroad are exempt to the extent permitted by the RBI, while travel is exempt only if gross total income before including the expenditure does not exceed ₹2,00,000. His treatment and stay of ₹90,000 is within the RBI limit of ₹1,00,000, so it is exempt. Travel of ₹25,000 is fully taxable because his gross total income exceeds ₹2,00,000. Hence only ₹25,000 is a taxable perquisite.

Where it goes wrong. Treating the RBI limit as the only condition gives Nil, but the separate ₹2,00,000 gross-total-income threshold makes the travel component taxable.

Authority. Section 17(2), proviso, clause (vi)(B), Income-tax Act, 1961

Question 4 · 2 marks · Chapter 3 Unit 4 and Chapter 5 · hard

Scenario. Meera Iyer, resident aged 41, has opted out of the default regime. Her salary income computed is Rs. 3,60,000. Her proprietorship incurred a current-year business loss of Rs. 1,20,000. During P.Y. 2025-26 she sold unlisted shares held for 30 months, earning long-term capital gain of Rs. 5,40,000. She sold listed equity shares with STT paid, held for 20 months, at a long-term capital loss of Rs. 90,000. She also sold listed equity shares with STT paid, held for 8 months, at short-term capital gain of Rs. 1,80,000, and jewellery held for 10 months at short-term capital loss of Rs. 70,000. On 1 April 2025 she gifted Rs. 6,00,000 to her husband, who kept it in a bank fixed deposit and earned interest of Rs. 54,000. Her minor son, aged 12, earned interest of Rs. 18,000 on a fixed deposit made from a gift received from his grandfather. Meera's income before clubbing is higher than her husband's. Her husband has salary income of Rs. 2,80,000. The minor son has no disability. All capital assets were held as investments and not as stock-in-trade. No deduction under Chapter VI-A is claimed.

What is Meera's net long-term capital gain after setting off the long-term capital loss but before any inter-head set-off?

1. Rs. 4,50,000, because the long-term capital loss is set off before any inter-head adjustment. (correct answer)
2. Rs. 5,40,000, because the long-term capital loss on STT-paid equity shares cannot be set off against any taxable capital gains.
3. Rs. 4,40,000, because the current business loss is set off against long-term gain first.
4. Rs. 3,60,000, because the short-term capital loss is also set off against long-term gain.

Answer: A — Rs. 4,50,000, because the long-term capital loss is set off before any inter-head adjustment.

Working. 5,40,000 - 90,000 = 4,50,000.

Explanation. Long-term capital loss of Rs. 90,000 can be set off against long-term capital gain of Rs. 5,40,000. The net long-term capital gain is Rs. 4,50,000. The current business loss is an inter-head adjustment and is considered after intra-head set-off. The short-term capital loss is set off against short-term capital gain.

Where it goes wrong. Mixing inter-head set-off of business loss with intra-head capital loss set-off gives Rs. 4,40,000.

Authority. section 70; section 74

Question 5 · 2 marks · Chapter 4: Clubbing of Income · medium

What amount is included in Meera's total income by applying the clubbing provisions?

1. Rs. 54,000, because only the spouse's interest is clubbed and the minor's interest is taxed separately.
2. Rs. 72,000, because both interest amounts are clubbed without any exemption.
3. Rs. 70,500, because spouse interest and minor interest less Rs. 1,500 are clubbed. (correct answer)
4. Rs. 18,000, because the spouse has independent income and only the minor's interest is clubbed.

Answer: C — Rs. 70,500, because spouse interest and minor interest less Rs. 1,500 are clubbed.

Working. 54,000 + 18,000 - 1,500 = 70,500.

Explanation. Interest of Rs. 54,000 on the fixed deposit made from the gift to the spouse is clubbed under section 64(1)(iv). Minor son's interest of Rs. 18,000 is clubbed under section 64(1A) with Meera because her income before clubbing is higher. Exemption under section 10(32) is Rs. 1,500. The clubbed amount is Rs. 70,500.

Where it goes wrong. Forgetting the Rs. 1,500 exemption under section 10(32) gives Rs. 72,000.

Authority. section 64(1)(iv); section 64(1A); section 10(32)

Question 6 · 2 marks · Chapter 5: Set-off and Carry Forward of Losses · hard

What is Meera's total income for A.Y. 2026-27?

1. Rs. 8,80,500, because the business loss is set off only against long-term gain.
2. Rs. 8,70,500, because salary, net long-term gain and clubbed income are aggregated after set-off. (correct answer)
3. Rs. 8,30,500, because the business loss is set off against salary before capital gains.
4. Rs. 9,90,500, because the entire business loss is ignored and no set-off is allowed.

Answer: B — Rs. 8,70,500, because salary, net long-term gain and clubbed income are aggregated after set-off.

Working. STCG 1,80,000 - STCL 70,000 = 1,10,000. Business loss 1,20,000: set 1,10,000 against STCG, 10,000 against LTCG. LTCG 4,50,000 - 10,000 = 4,40,000. Total 3,60,000 + 4,40,000 + 70,500 = 8,70,500.

Explanation. Short-term capital loss of Rs. 70,000 is set off against short-term capital gain of Rs. 1,80,000, leaving Rs. 1,10,000. Business loss of Rs. 1,20,000 is set off against that short-term gain and the balance Rs. 10,000 against long-term gain, leaving long-term gain of Rs. 4,40,000. Salary Rs. 3,60,000 plus long-term gain Rs. 4,40,000 plus clubbed income Rs. 70,500 gives Rs. 8,70,500.

Where it goes wrong. Business loss cannot be set off against salary, but it can be set off against capital gains.

Authority. section 71; section 72; section 74; section 64

Question 7 · 2 marks · Chapter 2 and Chapter 7 · hard

Scenario. Ms. Eva, a German citizen, came to India for the first time on 12 May 2025 and left on 8 October 2025, staying 150 days. She had not visited India earlier. On 20 September 2025, an Indian company paid her Rs. 8,00,000 for consultancy services used at its Pune plant. The payment was made to her bank account in Germany. She has no other income in India and no fixed base in India.

What is the correct tax position for the payment made by the Indian company to Ms. Eva?

1. She is non-resident, and the company must deduct tax under section 195 as the consultancy is used in India. (correct answer)
2. She is resident but not ordinarily resident, and no tax is deductible because payment is abroad.
3. She is non-resident, and no tax is deductible because she rendered the service outside India.
4. She is resident, and tax is deductible under section 194J on the professional fee.

Answer: A — She is non-resident, and the company must deduct tax under section 195 as the consultancy is used in India.

Working. Stay 150 days; no earlier visits; non-resident. Consultancy used in Pune plant; deemed accrual in India. TDS under section 195 applies.

Explanation. Ms. Eva is not an Indian citizen or person of Indian origin and stayed only 150 days, so she is non-resident under section 6(1). Fees for technical services, including consultancy, are deemed to accrue in India where the services are utilised in India, even if rendered outside India. Tax is therefore deductible under section 195.

Where it goes wrong. The place of payment or place of rendering service does not decide deemed accrual when the service is used in India.

Authority. section 6(1); section 9(1)(vii); section 195 (check)

Question 8 · 1 marks · Chapter 7: Advance Tax · medium

Scenario. Mr. Om, a resident individual aged 66, has income from bank interest and rent. He has no income chargeable under the head Profits and gains of business or profession. For P.Y. 2025-26, his tax payable after TDS is Rs. 18,000.

Is Mr. Om liable to pay advance tax for P.Y. 2025-26?

1. Yes, because tax payable after TDS exceeds Rs. 10,000.
2. Yes, because every resident individual above 60 must pay advance tax.
3. No, because interest and rent are taxed only through TDS.
4. No, because a resident individual aged 60 or more without business income is exempt from advance tax. (correct answer)

Answer: D — No, because a resident individual aged 60 or more without business income is exempt from advance tax.

Working. Age 66; no business income; tax after TDS Rs. 18,000. Senior-citizen exemption applies; no advance tax.

Explanation. Section 208 generally requires advance tax where tax payable is Rs. 10,000 or more. However, a resident individual aged 60 or more during the previous year and having no income under the head Profits and gains of business or profession is not liable to pay advance tax. Mr. Om qualifies for this exemption.

Where it goes wrong. The Rs. 10,000 threshold is generally relevant, but the senior-citizen exemption applies here.

Authority. section 207; section 208

Question 9 · 2 marks · Supply under GST; Charge of GST · hard

Scenario. Nakshatra Flowtech Pvt. Ltd. (NFP), a registered manufacturer of industrial pumps in Gurugram, Haryana, also provides installation services and has a registered branch at Ludhiana, Punjab. During FY 2025-26, NFP entered into these transactions. On 12 May 2025, it received Rs. 1,20,000 as advance from Udgam Infra Ltd., a registered person in Jaipur, Rajasthan, for a pump priced at Rs. 8,00,000 excluding GST. The pump was removed on 5 June 2025 and the invoice for the pump was issued on 3 June 2025. Installation at the Jaipur site was completed on 20 June 2025 and was invoiced separately on that date. The balance was received on 30 June 2025. GST on the pump and installation is 18%. On 8 July 2025, NFP moved pumps costing Rs. 3,00,000, plus GST at 18%, from Gurugram to its Ludhiana branch without raising any invoice or charging consideration; both locations are registered. On 15 August 2025, Sarthak Roadlines, a goods transport agency that has not taken input tax credit and has not opted to pay GST under forward charge, supplied freight services of Rs. 50,000 to NFP and issued a consignment note; NFP paid the freight on 10 September 2025. On 1 September 2025, an advocate issued an invoice of Rs. 40,000 for legal services relating to NFP's business; NFP paid on 20 October 2025. On 10 November 2025, NFP bought a car with seating capacity of five for its director for Rs. 6,00,000 plus GST at 28%, and paid Rs. 2,00,000 plus GST at 18% for works contract services for its office building, capitalised in its books. On 1 December 2025, NFP supplied a pump to Tarun Retail, an unregistered person, for Rs. 2,00,000 plus GST at 18%. The invoice recorded Tarun's billing address in Haryana and delivery address in Delhi. On 20 December 2025, under an agreement existing at the time of that supply, NFP gave Tarun a post-sale discount of Rs. 10,000 linked to the invoice; Tarun had no input tax credit to reverse. All amounts are exclusive of GST unless stated.

Which statement correctly describes NFP's 8 July 2025 movement of pumps to its Ludhiana branch?

1. It is not a supply because no consideration is charged and no invoice is raised by NFP for the movement.
2. It is a supply under Schedule I; IGST applies as the two registered units are distinct persons. (correct answer)
3. It is not a supply because both units belong to the same company with the same PAN and no consideration is charged.
4. It is a supply only when the Ludhiana branch later sells the pumps to an external customer in Punjab.

Answer: B — It is a supply under Schedule I; IGST applies as the two registered units are distinct persons.

Working. Schedule I para 2; separate registrations in Haryana and Punjab are distinct persons; inter-State movement attracts IGST.

Explanation. A transfer between registered establishments of the same person in different States is a supply between distinct persons under Schedule I even without consideration when made in the course of business. Since the supplier location is Haryana and the branch is in Punjab, IGST is attracted. The absence of invoice or consideration does not make it a non-supply.

Where it goes wrong. The no-consideration fact tempts treating the stock transfer as outside supply.

Authority. Section 7(1)(c) read with Schedule I, CGST Act 2017; Section 25(4), CGST Act 2017; Section 7(5), IGST Act 2017

Question 10 · 2 marks · Place of Supply · hard

For the 1 December 2025 supply to Tarun Retail, what is the place of supply and the tax implication?

1. Delhi, because delivery address is recorded in the invoice; IGST applies as supplier is in Haryana. (correct answer)
2. Haryana, because the billing address is in Haryana; CGST and SGST apply on the supply.
3. Delhi, because delivery address is recorded; CGST and SGST apply as the invoice is raised from Haryana.
4. Haryana, because the recipient is unregistered; IGST applies as the supplier is in Haryana.

Answer: A — Delhi, because delivery address is recorded in the invoice; IGST applies as supplier is in Haryana.

Working. Supplier located in Haryana; recipient address recorded in invoice includes delivery address in Delhi; place of supply is Delhi under section 10(1)(ca); hence inter-State supply liable to IGST.

Explanation. Under section 10(1)(ca) of the IGST Act, 2017, for a supply of goods made to an unregistered person, the place of supply is the location as per the address of the said person recorded in the invoice. The invoice recorded Tarun's delivery address in Delhi. Since the supplier is in Haryana and the place of supply is Delhi, the supply is an inter-State supply attracting IGST. Option b wrongly ignores the recorded address for delivery.

Where it goes wrong. Treating a delivery address as the recipient address even when the invoice separately records the unregistered recipient's billing address.

Authority. Section 10(1)(ca), IGST Act 2017

Question 11 · 2 marks · Time of Supply · medium

What is the time of supply of the goods transport agency service received from Sarthak Roadlines?

1. 10 September 2025, being earlier than the 61st day from invoice. (correct answer)
2. 15 October 2025, because it is the 61st day from issue of invoice.
3. 15 August 2025, because invoice date fixes time of supply for all reverse charge services.
4. 31 August 2025, because 15 days after invoice is the prescribed limit for GTA services.

Answer: A — 10 September 2025, being earlier than the 61st day from invoice.

Working. Invoice 15 Aug 2025; 60 days end 14 Oct 2025; 61st day 15 Oct 2025; payment 10 Sep 2025 earlier.

Explanation. GTA service here is under reverse charge. For services under reverse charge, time of supply is earlier of date of payment and the 61st day from invoice where the supplier issues invoice. Payment was on 10 September. The 61st day from 15 August falls later. Hence 10 September 2025 is the time of supply.

Where it goes wrong. The invoice date is used only to compute the 61st day; it is not automatically the time of supply.

Authority. Section 13(3), CGST Act 2017

Question 12 · 2 marks · Input Tax Credit · hard

What is the amount of input tax credit NFP can avail from the car, works contract, GTA and legal service transactions, ignoring other supplies?

1. Rs. 7,200, comprising RCM credit only on legal services because GTA service is exempt.
2. Rs. 2,12,700, comprising all GST paid on the motor car, works contract services, GTA freight and legal services.
3. Rs. 1,77,700, comprising car credit and RCM credit but not works contract credit.
4. Rs. 9,700, being RCM credit on GTA and legal services; car and works contract credit are blocked. (correct answer)

Answer: D — Rs. 9,700, being RCM credit on GTA and legal services; car and works contract credit are blocked.

Working. GTA 5% x 50,000 = 2,500; legal 18% x 40,000 = 7,200; eligible = 9,700. Car 28% x 6,00,000 = 1,68,000 blocked; works 18% x 2,00,000 = 36,000 blocked.

Explanation. GTA tax under reverse charge is 5% of Rs. 50,000 = Rs. 2,500; legal service tax under reverse charge is 18% of Rs. 40,000 = Rs. 7,200. Both are eligible if used for business. Credit on the car is blocked as it is a motor vehicle for persons with seating up to 13 and is not used for an allowed purpose. Credit on capitalised works contract for office building is also blocked.

Where it goes wrong. The car and works contract GST figures are large and tempt inclusion.

Authority. Section 16, CGST Act 2017; Section 17(5)(a), CGST Act 2017; Section 17(5)(c), CGST Act 2017

Question 13 · 2 marks · Value of Supply · hard

What is the value of the 1 December 2025 supply to Tarun Retail after considering the post-sale discount?

1. Rs. 1,90,000, because the discount is linked to the invoice and the agreement existed at supply.
2. Rs. 2,00,000, because the recipient could not reverse any input tax credit on the discount. (correct answer)
3. Rs. 1,90,000, because NFP issued a credit note for the discount after the supply was made.
4. Rs. 2,10,000, because the discount must be added back to the invoice value for GST.

Answer: B — Rs. 2,00,000, because the recipient could not reverse any input tax credit on the discount.

Working. Invoice value = ₹2,00,000. Post-sale discount ₹10,000 cannot be deducted because recipient reversal of ITC under section 15(3)(b)(ii) is absent. Taxable value = ₹2,00,000.

Explanation. Under section 15(3)(b)(ii) of the CGST Act, 2017, a post-supply discount is excluded from value only if input tax credit attributable to the discount has been reversed by the recipient. Because Tarun is unregistered and availed no input tax credit, no input tax credit was or could be reversed by him. Consequently, the condition of section 15(3)(b)(ii) is not satisfied, and the discount of ₹10,000 cannot be excluded. The value remains ₹2,00,000.

Where it goes wrong. Treating a zero ITC position of an unregistered recipient as if it prevented the statutory discount conditions from being met.

Authority. Section 15(3)(b), CGST Act 2017

Question 14 · 2 marks · Time of Supply · medium

For the pump supplied to Udgam Infra Ltd., what is the time of supply for payment of GST on the pump?

1. 12 May 2025, because NFP received the advance on that date from Udgam.
2. 5 June 2025, because removal of goods fixes time of supply even if invoice is earlier.
3. 3 June 2025, because the invoice was issued before removal within the section 31 time limit. (correct answer)
4. 20 June 2025, because installation at site was completed on that date.

Answer: C — 3 June 2025, because the invoice was issued before removal within the section 31 time limit.

Working. Invoice 3 June 2025 before removal 5 June 2025; section 31 time met; time of supply 3 June 2025.

Explanation. For goods under forward charge, GST is payable at the time of supply given in section 12(2)(a), i.e. invoice date or last date for invoice. The invoice was issued on 3 June before removal on 5 June, so it was within the section 31 limit. The advance received on 12 May does not fix time of supply for goods.

Where it goes wrong. The advance and installation date are distractors for goods under forward charge.

Authority. Section 12(2)(a), CGST Act 2017; Notification No. 66/2017 CT dated 15.11.2017

Question 15 · 2 marks · Place of Supply · hard

Scenario. MetroAds owns a billboard fixed on land in Noida. Kavya Advertising, registered in Delhi, contracts MetroAds to display Kavya's client advertisement for 30 days. MetroAds keeps possession of the billboard, controls the display, and is responsible for arranging visibility at the location. No right to use the billboard or the space is transferred to Kavya. MetroAds invoices Kavya for advertisement services. What is the place of supply of MetroAds's service to Kavya under the IGST Act, 2017?

What is the place of supply of MetroAds's service to Kavya Advertising?

1. Noida, because the advertisement is displayed at the billboard location in Noida.
2. Noida, because the billboard is an immovable property structure fixed to earth and the service directly relates to it.
3. Delhi, because the service is advertisement and the recipient Kavya is registered in Delhi. (correct answer)
4. Delhi, because the invoice is raised by MetroAds from its office in Delhi.

Answer: C — Delhi, because the service is advertisement and the recipient Kavya is registered in Delhi.

Working. No sale of space or grant of right to use immovable property; general rule applies; registered recipient in Delhi.

Explanation. MetroAds keeps possession and control of the billboard and provides a display service; it does not transfer the right to use immovable property. The service is therefore advertisement service governed by the general rule. For a registered recipient, place of supply is the location of the recipient, Kavya, in Delhi.

Where it goes wrong. The fixed billboard tempts applying the immovable property rule.

Authority. Section 12(2), IGST Act 2017; CBIC clarification on advertising space and display services

Question 16 · 1 marks · TDS and TCS · medium

Scenario. Prakhar Ltd., registered in Gujarat, sells goods through BazaarHub, an electronic commerce operator that collects consideration. In July, net taxable inter-State supplies made through BazaarHub by registered suppliers were Rs. 20,00,000. BazaarHub also supplied restaurant services notified under section 9(5) through its platform worth Rs. 2,00,000, on which BazaarHub paid GST. What amount of TCS is BazaarHub required to collect for July?

What amount of TCS is BazaarHub required to collect for July?

1. Rs. 11,000, because TCS applies to all supplies including section 9(5) restaurant services.
2. Nil, because BazaarHub paid GST on restaurant services under section 9(5) through its platform.
3. Rs. 5,000, because TCS under IGST is 0.25% of net taxable supplies for the month.
4. Rs. 10,000, because TCS at 0.5% applies to net inter-State supplies excluding section 9(5) services. (correct answer)

Answer: D — Rs. 10,000, because TCS at 0.5% applies to net inter-State supplies excluding section 9(5) services.

Working. Net inter-State taxable supplies = 20,00,000; section 9(5) value 2,00,000 excluded; TCS = 0.5% x 20,00,000 = 10,000.

Explanation. TCS under section 52 is on net value of taxable supplies made through the operator by other suppliers, excluding services notified under section 9(5). For inter-State supplies the notified rate is 0.5%. Restaurant services on which BazaarHub paid GST under section 9(5) are excluded. TCS is 0.5% of Rs. 20,00,000 = Rs. 10,000.

Where it goes wrong. Including the section 9(5) restaurant value gives Rs. 11,000.

Authority. Section 52, CGST Act 2017; Section 20, IGST Act 2017; Notification No. 17/2017 CT (R) dated 28.06.2017