CA Inter Taxation — Question Paper — September 2025

Note on Incomplete Data: The question as presented does not include the list of transactions/items for M/s. ABC Corporation Pvt. Ltd. for January 2025. The computation below is therefore structured as a framework answer demonstrating the correct legal provisions and methodology applicable to a standard GST liability computation question under the Central Goods and Services Tax Act, 2017 (CGST Act).

Legal Framework for GST Liability Computation:

Under Section 9 of the CGST Act, 2017, CGST is levied on intra-State supplies of goods or services or both. Similarly, Section 5 of the IGST Act, 2017 governs IGST on inter-State supplies. The liability arises at the time of supply as determined under Section 12 (goods) and Section 13 (services) of the CGST Act.

Step 1 — Determine Nature of Supply (Section 7, CGST Act): Each transaction must first be classified as supply of goods or services, and whether it is taxable, exempt, zero-rated, or non-GST supply.

Step 2 — Determine Place of Supply (Sections 10–13, IGST Act): If supply is intra-State → CGST @ 9% + SGST @ 9% applies. If supply is inter-State → IGST @ 18% applies.

Step 3 — Determine Taxable Value (Section 15, CGST Act): Transaction value is the price actually paid or payable, inclusive of all incidental expenses, packing, freight (if charged to recipient), subsidies linked to supply, but excluding GST charged. Discounts given before/at time of supply are deductible if recorded in invoice. Post-supply discounts are deductible only if established under Section 15(3)(b): agreement exists prior to supply and recipient reverses ITC on discount.

Step 4 — Apply Correct Rate: CGST @ 9% + SGST @ 9% for intra-State; IGST @ 18% for inter-State, on taxable value.

Step 5 — Input Tax Credit (ITC) Set-off (Sections 49 & 49A, CGST Act): IGST credit is first utilised against IGST liability, then CGST, then SGST. CGST credit is used against CGST liability only. SGST credit is used against SGST liability only. Cross-utilisation of CGST and SGST is not permitted.

Step 6 — Net GST Payable: Output tax liability minus eligible ITC = Net GST payable in cash via Electronic Cash Ledger.

Common Items and Their Treatment:
- Advance received for future supply: Taxable at time of receipt under Section 12(2)/13(2) — time of supply is earlier of invoice date or payment date.
- Goods sent on approval basis: Time of supply is 6 months from date of removal or earlier of invoice/payment (Section 12(6)).
- Export of goods (zero-rated supply, Section 16, IGST Act): No GST charged; refund of ITC available.
- Free samples: No consideration → outside scope of supply under Schedule I only if related party or without consideration per Section 7. Otherwise, ITC reversal required under Rule 43 or Section 17(5)(h).
- Reverse Charge Mechanism (RCM) — Section 9(3)/(4), CGST Act: Liability on recipient; no ITC offset against RCM liability — RCM must be paid in cash. However, ITC of RCM paid is available subject to Section 16 conditions.
- Composition Scheme dealers (Section 10): Cannot collect GST from customers; pay tax at flat rates; cannot avail ITC.

Final Answer: To compute the precise GST liability, the specific transaction-wise data (invoice values, nature of supply, place of supply, ITC available) must be provided. Once those details are available, the above framework — taxable value determination → output tax → ITC set-off → net payable — should be applied systematically for each transaction to arrive at CGST, SGST, and IGST payable separately.

Determination of Input Tax Credit (ITC) Eligible for Veer Trading Private Limited (VTPL) — February 2025

All transactions are intra-state; therefore, CGST and SGST are applicable.

(i) Reimbursement of Local Sports Club Fees — ₹20,000

The amount represents membership fees paid to a local sports club. As per Section 17(5)(b)(ii) of the Central Goods and Services Tax Act, 2017 (CGST Act), ITC is specifically blocked on membership of a club, health and fitness centre. A sports club falls squarely within this category. The fact that the company reimburses such fees on behalf of itself does not alter the nature of the supply. Accordingly, ITC of ₹2,400 (CGST ₹1,200 + SGST ₹1,200) is not eligible — NIL ITC.

(ii) Equipment Purchased from OEM on Ex-Works Basis — ₹10,00,000

In an Ex-Works (EXW) contract, the seller's obligation is fulfilled when goods are made available to the buyer at the seller's premises or handed over to the carrier/transporter designated by the buyer. Here, the OEM handed over the equipment to the transporter (acting on behalf of VTPL) on 28th February 2025.

As per the Explanation to Section 16(2)(b) of the CGST Act, it is deemed that the registered person has received the goods where the goods are delivered by the supplier to any other person on the direction of such registered person — whether acting as an agent or otherwise — before or during movement of goods, by way of transfer of documents of title to goods or otherwise.

Since the transporter acts on behalf of VTPL and goods were handed to the transporter on 28th February 2025, VTPL is deemed to have received the goods in February 2025. Physical receipt on 2nd March 2025 is irrelevant in this context. All other conditions under Section 16(2) being satisfied, ITC of ₹1,20,000 (CGST ₹60,000 + SGST ₹60,000) is fully eligible in February 2025.

(iii) Event Charges from M/s Daksh Event Company — ₹2,50,000 (inclusive of food ₹40,000)

The total invoice of ₹2,50,000 comprises two distinct components:

Event management service (₹2,10,000 @ 9% CGST + 9% SGST): ITC on event management services is not blocked under Section 17(5) of the CGST Act, and since VTPL uses this service in the course or furtherance of business, ITC of ₹37,800 (CGST ₹18,900 + SGST ₹18,900) is eligible.

Food supply (₹40,000 @ 14% CGST + 14% SGST): As per Section 17(5)(b)(i) of the CGST Act, ITC is blocked on food and beverages unless the inward and outward supply are of the same category or the supply is part of a composite supply where the principal supply is taxable. VTPL is engaged in wholesale trading of sports items — food supply is neither their outward supply category nor part of such a composite supply. Accordingly, ITC of ₹11,200 (CGST ₹5,600 + SGST ₹5,600) on food is blocked — NIL ITC on food component.

Net eligible ITC for item (iii) = ₹37,800.

(iv) Goods Transport Vehicle — ₹14,00,000 @ 14% CGST + 14% SGST

VTPL has claimed depreciation of ₹2,10,000 (₹14,00,000 × 15%) under the Income Tax Act, 1961 on this capital asset. As per Section 16(3) of the CGST Act, where a registered person has claimed depreciation on the cost of capital goods under the provisions of the Income Tax Act, 1961, ITC on such capital goods shall not be allowed.

Since depreciation has been claimed under the IT Act, the GST paid (CGST ₹1,96,000 + SGST ₹1,96,000 = ₹3,92,000) is ineligible for ITC. NIL ITC.

*(Note: Even if depreciation had not been claimed, Section 17(5)(a) blocks ITC on motor vehicles except where used for transportation of goods. Since VTPL is a trading entity using this vehicle for goods transport, that exception would have applied — but the issue is rendered academic by Section 16(3).)*

Summary — Total Eligible ITC for February 2025:

| Item | Tax Paid (₹) | Eligible ITC (₹) |
|------|-------------|------------------|
| (i) Sports club membership | 2,400 | NIL |
| (ii) OEM equipment (Ex-Works) | 1,20,000 | 1,20,000 |
| (iii) Event charges (excl. food) | 37,800 | 37,800 |
| (iii) Food supply | 11,200 | NIL |
| (iv) Goods transport vehicle | 3,92,000 | NIL |
| Total Eligible ITC | | ₹1,57,800 |

E-way Bill Requirements under Rule 13(1) of CGST Rules, 2017:

An E-way Bill is required to be generated when goods of value exceeding ₹50,000 are transported from one place to another. The key requirements are:

Generation and Responsibility: The e-way bill must be generated on the GST portal before the commencement of movement of goods. It is generated on the GSTIN of the principal (the person responsible for movement of goods). The principal includes the supplier, recipient, or any other registered person authorized to send goods on behalf of another.

Content Requirements: The e-way bill must contain details of: (i) the supplier and recipient with their GSTINs; (ii) the goods being transported, including HSN code, quantity, value, and applicable tax; (iii) vehicle registration number and type; (iv) transporter identification or name; and (v) the route of transportation.

Validity Period: The validity of the e-way bill depends on the distance: up to 100 km - 1 day; 101-500 km - 3 days; 501-1000 km - 5 days; above 1000 km - 10 days from the date of generation.

"Bill to Ship to" Model (Third Party Supply):

In the "Bill to Ship to" model, the supplier raises an invoice to one party (Bill to) while physically delivering goods to another party (Ship to). This is a three-party arrangement where the actual consignee differs from the invoice recipient.

E-way Bill Provision: The supplier issuing the invoice is responsible for generating the e-way bill. The consignor in the e-way bill is the supplier raising the invoice. However, the consignee details in the e-way bill must reflect the actual physical recipient (Ship to address), not the invoice recipient (Bill to party).

Applicability: Such supplies are permitted under GST, and the e-way bill requirements apply based on the actual movement of goods. The value limit of ₹50,000 is determined on the invoice value. The supplier, as the principal, bears the responsibility for e-way bill compliance even though the goods are shipped to a third party on behalf of another registered person.

Computation of Total Income of Mr. Ram for Assessment Year 2025-26

Income from Business/Profession

The starting point is the net profit as per the Profit and Loss Account of ₹52,00,000. Each item is then examined for admissibility under the Income Tax Act, 1961.

(i) Additional Depreciation (IT Rules): The depreciation allowable under the Income Tax Rules exceeds the book depreciation already charged by ₹2,10,000. This excess is an additional deduction permissible under Section 32 of the Income Tax Act 1961. Accordingly, ₹2,10,000 is deducted from net profit.

(ii) Interest u/s 234D — ₹2,10,000: Interest payable under the Income Tax Act (Sections 234A/234B/234C/234D) is a personal liability arising from income tax obligations and is not a business expense. It is specifically disallowed under Section 37(1) of the Income Tax Act 1961 as it is not wholly and exclusively for business purposes. Added back: ₹2,10,000.

(iii) Whitewash contractor payment — ₹3,60,000: Whitewash work at factory premises constitutes a 'works contract' under Section 194C of the Income Tax Act 1961. TDS was not deducted and the contractor did not file his return of income. Under Section 40(a)(ia), 30% of such payment is disallowed. Disallowance = 30% × ₹3,60,000 = ₹1,08,000. Added back: ₹1,08,000.

(iv) PMRF Contribution — ₹2,00,000: Contributions to the Prime Minister National Relief Fund are donations, not business expenditure. They are not deductible under Section 37(1). Added back: ₹2,00,000. However, a 100% deduction is available under Section 80G of the Income Tax Act 1961 (no qualifying ceiling applies to PMRF; payment by cheque satisfies the mode-of-payment requirement).

(v) Political party advertising — ₹40,000: Section 37(2B) of the Income Tax Act 1961 explicitly prohibits deduction of any expenditure incurred on advertisement in a souvenir, brochure, tract, pamphlet or like publication of a political party. Payment by cheque does not override this specific disallowance. Added back: ₹40,000.

(vi) Interest on co-operative bank term loan — ₹2,60,000: Interest on loans from co-operative banks (other than primary agricultural credit societies) is governed by Section 43B(e) of the Income Tax Act 1961 and is deductible only on actual payment before the due date of filing the return of income. Since it was NOT paid before the due date, the entire ₹2,60,000 is disallowed. Added back: ₹2,60,000.

(vii) Employer NPS contribution — ₹1,50,000: Under Section 36(1)(iva) of the Income Tax Act 1961, employer's contribution to NPS for employees is deductible up to 10% of the employee's salary (basic + DA). Eligible salary/DA = ₹10,00,000. Allowable deduction = 10% × ₹10,00,000 = ₹1,00,000. Excess = ₹1,50,000 − ₹1,00,000 = ₹50,000 is disallowed. Added back: ₹50,000.

(viii) Government subsidy — ₹2,50,000: The industrial power tariff conversion amount received from the Central Government is a revenue subsidy covered under Section 2(24)(xviii) of the Income Tax Act 1961 (inserted by Finance Act 2015). As it is revenue in nature and already credited in the P&L, it is taxable business income. No adjustment required.

(ix) FD interest — ₹1,50,000: Interest on fixed deposits with banks is assessable as Income from Other Sources under Section 56(2) of the Income Tax Act 1961 and not as business income. Deducted from business income: ₹1,50,000.

(x) Cash gift from father — ₹90,000: Father is a 'relative' as defined under Section 56(2)(x) of the Income Tax Act 1961. Gifts received from relatives are exempt from tax. This is not a business receipt. Deducted from business income: ₹90,000.

Income from Business/Profession: ₹56,18,000

Income from Other Sources
Interest on bank fixed deposits (gross): ₹1,50,000

Gross Total Income: ₹57,68,000

Deductions under Chapter VI-A
Section 80G — PMRF (100% deduction; no qualifying ceiling; paid by cheque): ₹2,00,000

Total Income: ₹55,68,000

Tax Computation (Old Tax Regime, AY 2025-26)
Mr. Ram is 58 years of age — not a senior citizen (threshold is 60 years). Tax is computed at slab rates under the old regime.

Income tax on ₹55,68,000: ₹14,82,900
Surcharge @ 10% (total income exceeds ₹50,00,000): ₹1,48,290
Tax + Surcharge: ₹16,31,190
Health and Education Cess @ 4%: ₹65,248
Total Tax Liability: ₹16,96,438

Note: Marginal relief is not applicable as the incremental tax burden (₹3,18,690) is less than the excess income above ₹50,00,000 (₹5,68,000).

Determination of Sweeha's Residential Status

Under Section 6 of the Income Tax Act, 1961, Sweeha's residential status must be determined first. She is an Indian citizen with an established CA firm in Chennai. While she visits country A quite often, the facts indicate she is likely a Resident because she maintains her primary business and base in India. To determine whether she is Resident and Ordinarily Resident (ROR) or Resident but Not Ordinarily Resident (RNOR), we apply Section 6(6): she is ROR if resident for 2+ out of 10 preceding years AND 7+ out of preceding 10 years. Given her frequent foreign visits, she is most likely RNOR.

Taxability Analysis Under Section 5(1) of ITA, 1961

For a RNOR, only the following income is taxable in India: (a) all income accruing/arising in India, and (b) foreign source income received or accrued in India.

(i) Remuneration from CA Firm - ₹16 lakhs: This is income from an Indian source (the firm is in Chennai). It is accruing in India and received in India. Fully taxable in India: ₹16 lakhs.

(ii) Accounting Services in Country A - ₹8 lakhs: This income arises from services rendered in country A and is received in country A's bank account. It is foreign source income, not received in India. For a RNOR, this is not taxable in India. (Note: If she were ROR, it would be taxable.)

(iii) Dividend from Country A Companies - ₹8 lakhs: This is foreign source income (dividend from foreign companies) received in country A. For a RNOR, not taxable in India. (Would be taxable only for ROR.)

(iv) Business Income from Country A Controlled from India - ₹7 lakhs: Although controlled from India, the business is established and operates in country A, making it foreign source income. Received in country A. For a RNOR, not taxable in India. The place of business operations determines source; control from India alone does not convert it to Indian source under Section 5(1).

Conclusion

Assuming Sweeha qualifies as RNOR (the most probable classification), her total income taxable in India is ₹16 lakhs. The foreign source incomes totaling ₹23 lakhs (₹8L + ₹8L + ₹7L) are not taxable in India as they are neither earned in India nor received in India. This position is supported by the fact that she bears no tax liability in country A—India would have the right to tax such income only if she were ROR, which requires different factual circumstances regarding her residence history.

Note on Incomplete Data: The case scenario provides only 'Additional Information' items (i) and (ii) for Mr. Ram, but the primary income details (salary, business profits, capital gains, investments, deductions, etc.) appear to be missing from the question as presented. The following answer addresses the tax treatment of both additional items in full and provides the complete computation framework. A full numerical solution requires the base income data.

Treatment of Additional Information Items (applicable to PY 2024-25, AY 2025-26):

Item (i) — Cash Payment of ₹15,000 [Section 40A(3A) of the Income Tax Act, 1961]:
The expenditure of ₹15,000 was incurred in FY 2023-24 (PY 2023-24) and was already allowed as a deduction on mercantile basis in that year. However, it was paid in cash on 18-01-2025 (i.e., in PY 2024-25), and the amount exceeds ₹10,000 (the cash payment limit under Section 40A(3)). Section 40A(3A) provides that where an expenditure was allowed in an earlier year and is subsequently paid in cash in a manner attracting Section 40A(3), the amount so paid shall be deemed as profits and gains of business or profession in the year of such payment. Accordingly, ₹15,000 is to be added as deemed income in the computation for PY 2024-25.

Item (ii) — Audit Fee of ₹75,000 [Section 40(a)(ia) of the Income Tax Act, 1961]:
Audit fee of ₹75,000 for PY 2023-24 — TDS was deducted but not deposited in the relevant previous year. Under Section 40(a)(ia), if TDS is deducted but not deposited on or before the due date of furnishing the return of income under Section 139(1) for that year, 30% of such expenditure is disallowed in PY 2023-24. Disallowed amount = 30% × ₹75,000 = ₹22,500 (disallowed in PY 2023-24). However, the second proviso to Section 40(a)(ia) provides that the disallowed amount shall be allowed as a deduction in the year in which TDS is actually deposited. Since TDS was deposited on 12-12-2024 (i.e., in PY 2024-25), ₹22,500 is allowable as a deduction in PY 2024-25.

Net Impact on Business Income for PY 2024-25:
Add: Deemed income under Section 40A(3A) → ₹15,000; Less: Deduction now allowed under Section 40(a)(ia) → ₹22,500; Net adjustment = (–₹7,500), i.e., net reduction in taxable income.

(a) Total Income and Tax Liability — Old Tax Regime (Normal):
Under the old (regular) tax regime, the total income is computed after allowing all eligible exemptions (HRA, LTA, standard deduction of ₹50,000 for salaried) and Chapter VI-A deductions (Sections 80C, 80D, 80TTA, etc.). The applicable slab rates for AY 2025-26 are: Nil up to ₹2,50,000; 5% from ₹2,50,001–₹5,00,000; 20% from ₹5,00,001–₹10,00,000; 30% above ₹10,00,000. Rebate under Section 87A: ₹12,500 if total income does not exceed ₹5,00,000. Health and Education Cess @ 4% is applicable on tax. [Full computation requires base income data not provided in the question.]

(b) Total Income and Tax Liability — Section 115BAC (New Tax Regime):
Under Section 115BAC (the new/default tax regime from AY 2024-25 onwards), no exemptions or most deductions are available (e.g., no HRA, LTA, standard deduction ₹50,000 for salaried is available from AY 2024-25 after amendment, but Chapter VI-A deductions like 80C, 80D are not available). Applicable slab rates: Nil up to ₹3,00,000; 5% from ₹3,00,001–₹7,00,000; 10% from ₹7,00,001–₹10,00,000; 15% from ₹10,00,001–₹12,00,000; 20% from ₹12,00,001–₹15,00,000; 30% above ₹15,00,000. Rebate under Section 87A: ₹25,000 if total income does not exceed ₹7,00,000. Cess @ 4% applies. [Full computation requires base income data.]

(c) Suggestion — Most Beneficial Regime:
Generally, the old tax regime is more beneficial if total deductions (80C, 80D, HRA, etc.) are substantial (typically when deductions exceed ~₹3.75 lakh for higher incomes). The Section 115BAC regime is more beneficial when the taxpayer has limited deductions/exemptions, as the lower slab rates and higher basic exemption (₹3,00,000 vs ₹2,50,000) and higher rebate threshold (₹7,00,000 vs ₹5,00,000) reduce tax outflow. For Mr. Ram, once the full income data is available, the regime yielding the lower net tax liability after cess should be opted. Since Section 115BAC is the default regime from AY 2024-25, he must opt out of it explicitly if he wishes to use the old regime (applicable if he has business income — option must be exercised before the due date of filing return under Section 139(1)).

Answer: Option 2 (using actual sale price of ₹80,00,000) is more beneficial, resulting in lower capital gains. However, if section 50C applies mandatorily, then Option 1 must be followed.

Two Computation Options:

Option 1: Applying Section 50C (Stamp Duty Valuation)
When the stamp duty valuation (₹82,50,000) exceeds the actual selling price (₹80,00,000), section 50C of the Income Tax Act, 1961 deems the stamp duty valuation as the full value of consideration. This results in higher taxable capital gains.

Option 2: Using Actual Sale Price (Challenging Section 50C)
If Mani can demonstrate that the stamp duty valuation is excessive and not reflective of the fair market value on the date of sale, he may challenge section 50C and use the actual consideration of ₹80,00,000.

Detailed Comparison:

Option 1 - With Section 50C:
Long-Term Capital Gain = ₹36,692,857
Tax at 20% (LTCG rate) = ₹7,338,571

Option 2 - Actual Sale Price:
Long-Term Capital Gain = ₹34,192,857
Tax at 20% (LTCG rate) = ₹6,838,571

Option 2 saves ₹500,000 in tax, making it more beneficial.

Section 115BAC Comparison:
If Mani opts for the new tax regime under section 115BAC (without indexation benefit):
LTCG would be ₹66,75,000 (₹80,00,000 - ₹13,25,000), resulting in tax of ₹13,35,000 at 20%. This is significantly higher than the indexed cost method, making the old regime with indexation benefit clearly more beneficial.

Important Assumptions:
1. Mani has no other income chargeable to tax (or only exempt income such as agricultural income below the threshold)
2. Mani has not availed of section 115BAC in any previous assessment year or is not bound by prior election
3. The property is a long-term capital asset (held for more than 2 years)
4. Indexation benefit is available under the old tax regime

Conclusion:
Mani should: (i) Challenge the section 50C valuation if genuinely excessive, using Option 2; (ii) If section 50C applies, accept it as mandatory under Option 1; (iii) Continue with the old tax regime (not section 115BAC) to retain indexation benefit, which significantly reduces taxable capital gains.

Computation of Taxable Income of Prabhu for AY 2025-26 (Old Tax Regime)

Income from Salaries:

Basic Salary: ₹30,000 × 12 = ₹3,60,000

Perquisites:

(i) Accommodation: The accommodation is unfurnished and owned by the employer. As per Rule 3(1) of the Income Tax Rules 1962, the perquisite value = 15% of salary (assuming city population > 25 lakhs). Salary for this purpose = basic salary = ₹3,60,000. Perquisite = 15% × ₹3,60,000 = ₹54,000. Note: The accommodation was provided from 01.03.2024 (FY 2023-24), so it is available for all 12 months in FY 2024-25. The fact that Prabhu occupied it only from 01.12.2024 is irrelevant — perquisite is taxable from date of provision, not occupation. Cost of ₹20 lakhs is irrelevant for employer-owned accommodation.

(ii) Mobile Phone and Telephone Allowance: As per Rule 3(7)(vii), use of telephone including mobile phone provided by the employer (even for personal use) is NIL perquisite — employer's mobile phone (cost ₹90,000) is exempt. However, the telephone allowance of ₹1,000 p.m. is a cash allowance and is fully taxable = ₹1,000 × 12 = ₹12,000. The aggregate bill of ₹10,800 relates to the employer's mobile and is not separately taxable.

(iii) Sale of Car to Prabhu: As per Rule 3(7)(viii), perquisite = WDV of car less amount recovered from employee. For motor cars, normal wear and tear = 20% p.a. on WDV (reducing balance). Car purchased 01.07.2022 for ₹10,00,000; sold 01.08.2024. Two complete years of depreciation: WDV = ₹10,00,000 × 80% × 80% = ₹6,40,000. Perquisite = ₹6,40,000 − ₹2,50,000 = ₹3,90,000.

(iv) Video Camera and Laptop: As per Rule 3(7)(vii), use of laptop/computer is NIL perquisite — Laptop (cost ₹2,00,000) is exempt. For the video camera (other electronic asset), as per Rule 3(7)(viii), perquisite = 10% p.a. of actual cost = 10% × ₹50,000 = ₹5,000 (full year, 01.04.2024 to 31.03.2025).

Gross Salary = ₹3,60,000 + ₹54,000 + ₹12,000 + ₹3,90,000 + ₹5,000 = ₹8,21,000

Less: Standard Deduction u/s 16(ia) of the Income Tax Act 1961 = ₹50,000 (old tax regime)

Taxable Income (Income from Salaries) = ₹7,71,000

Note: Cost Inflation Index figures given are not relevant for perquisite valuation; they would apply to capital gains computations. No Chapter VI-A deductions are claimed as none are mentioned.

Note: The question as presented is incomplete — the base income figures (profits from business/profession, salary, house property, capital gains, investments, deductions claimed, etc.) have not been provided. Only the two adjustment items and the Cost Inflation Index (CII) data are available. A full numerical computation of total income and tax liability is therefore not possible without that data. The solution below addresses the correct treatment of each item and provides the complete computational framework that would be applied once the base figures are available.

Treatment of Item (i) — Cash Payment of ₹15,000 [Section 40A(3A) of the Income Tax Act, 1961]

The expenditure of ₹15,000 pertained to PY 2023-24 and was allowed as a deduction in that year on a mercantile (accrual) basis. In PY 2024-25 (the current year), the actual payment was made in cash on 18-01-2025, and the amount exceeds ₹10,000. Under Section 40A(3A), where an allowance has been granted in an earlier year and payment is subsequently made in cash exceeding ₹10,000, the payment is deemed to be profits and gains of business or profession of the year in which cash payment is made. Accordingly, ₹15,000 is added back as income in PY 2024-25.

Treatment of Item (ii) — Audit Fee ₹75,000 [Section 40(a)(ia) of the Income Tax Act, 1961]

TDS was deducted on the audit fee but not deposited before the due date of filing the return of income for PY 2023-24. Under Section 40(a)(ia), 30% of such expenditure is disallowed in the year of deduction (PY 2023-24): i.e., 30% × ₹75,000 = ₹22,500 was disallowed in PY 2023-24. The TDS was subsequently deposited on 13-12-2024, which falls within PY 2024-25 and before the due date of filing the return for PY 2024-25. As per the proviso to Section 40(a)(ia), the ₹22,500 previously disallowed becomes deductible in PY 2024-25 (the year in which TDS is actually deposited).

Cost Inflation Index — Role in Computation

CII for FY 2021-22 is 317 and for FY 2024-25 is 363. These would be used to compute Indexed Cost of Acquisition under Section 48 for a long-term capital asset acquired in or before FY 2021-22 and transferred in FY 2024-25: Indexed Cost = (Original Cost × 363) ÷ 317. Without the asset details, this cannot be completed numerically.

Framework for Comparison: Normal Regime vs. Section 115BAC (New Regime)

Once the complete income data is available, the following approach is used:

Under the Normal (Old) Regime: All Chapter VI-A deductions (80C, 80D, etc.), HRA exemption, Standard Deduction, set-off of house property loss, and other exemptions apply. Slab rates: Nil up to ₹2,50,000; 5% (₹2.5L–₹5L); 20% (₹5L–₹10L); 30% above ₹10L. Rebate under Section 87A up to ₹12,500 if total income ≤ ₹5,00,000.

Under Section 115BAC (New Regime) for AY 2025-26: Most deductions and exemptions are not available. Slab rates: Nil up to ₹3,00,000; 5% (₹3L–₹7L); 10% (₹7L–₹10L); 15% (₹10L–₹12L); 20% (₹12L–₹15L); 30% above ₹15L. Standard deduction of ₹75,000 is available for salary income. Rebate under Section 87A up to ₹25,000 if total income ≤ ₹7,00,000. Health and Education Cess at 4% applies under both regimes.

Suggestion: The regime resulting in a lower net tax liability should be adopted. Generally, the new regime is beneficial where deductions under Chapter VI-A are low; the old regime is preferable where significant deductions/exemptions are available.

Final Answer: A complete comparison cannot be made without the base income data. Please provide the full set of income details (P&L summary, salary, house property, capital gains, deductions) for the complete computation.

Relevant Provisions under Section 6 of the Income Tax Act, 1961:

An individual is Resident if he/she satisfies either of the two basic conditions under Section 6(1):
(a) Stay in India ≥ 182 days during the Previous Year (PY); OR
(b) Stay in India ≥ 60 days during the PY AND ≥ 365 days in the 4 immediately preceding PYs.

A Resident is Ordinarily Resident (ROR) only if both additional conditions under Section 6(6) are satisfied:
(i) Was resident in India in at least 2 out of 10 preceding PYs; AND
(ii) Stayed in India for 729 days or more in 7 preceding PYs.

If either additional condition fails → Not Ordinarily Resident (NOR).

If both basic conditions fail → Non-Resident (NR).

Section 6(1A) — Deemed Resident Provision (introduced by Finance Act 2020): An individual who is a citizen of India and is not liable to tax in any other country or territory shall be deemed to be resident in India if total income (other than income from foreign sources) exceeds ₹15 lakhs during the PY. Such deemed residents are treated as NOR under Section 6(6).

Assuming Sweeha is an Indian citizen, not liable to tax in any other country, with total income (other than foreign sources) of ₹16 lakhs in the base case:

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(i) She did not visit India during FY 2024-25:

Days of stay in India = 0. Both basic conditions under Section 6(1) are NOT satisfied. However, Section 6(1A) applies since she is an Indian citizen, not liable to tax in any other country, and her total income other than foreign sources = ₹16 lakhs > ₹15 lakhs threshold. Therefore, she is deemed to be Resident in India and is treated as Not Ordinarily Resident (NOR) by virtue of Section 6(6).

Taxability (Section 5): Income received/accrued in India is taxable. Income from a business controlled from India or a profession set up in India is also taxable. Pure foreign income is NOT taxable in India.

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(ii) She visits and stays in India for 200 days every year for the 12 preceding previous years including FY 2024-25:

Days of stay in FY 2024-25 = 200 days ≥ 182 days. Basic condition (a) is satisfied → She is Resident.

Test for ROR under Section 6(6):
- Additional condition (i): Was she resident in at least 2 of the 10 preceding PYs? — Yes, she stayed 200 days every year, so she was resident in ALL 10 preceding PYs. Condition SATISFIED.
- Additional condition (ii): Did she stay ≥ 729 days in 7 preceding PYs? — 200 × 7 = 1,400 days > 729 days. Condition SATISFIED.

Both additional conditions are satisfied → She is Resident and Ordinarily Resident (ROR).

Taxability (Section 5): Global income — i.e., all income whether accrued/received in India or outside India — is fully taxable in India.

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(iii) She did not visit India during FY 2024-25 but spent ₹4 lakhs (instead of ₹16 lakhs):

Days of stay in India = 0. Both basic conditions under Section 6(1) are NOT satisfied. Section 6(1A) is examined: She is an Indian citizen and not liable to tax in any other country, BUT her total income other than foreign sources = ₹4 lakhs which is less than the ₹15 lakh threshold. Therefore, Section 6(1A) does NOT apply.

She is a Non-Resident (NR).

Taxability (Section 5): Only income received or deemed to be received in India, or accruing or arising in India, is taxable. Foreign income is not taxable in India.

INCOME CLASSIFICATION AND COMPUTATION OF GROSS TOTAL INCOME FOR THE YEAR ENDED 31.03.2025

Income by Source:

Profit & Gains of Business or Profession (PGBP):
Remuneration from Partnership Firm A (deductible in computing firm's income): ₹9.7 lakhs
Income from owning and maintaining race horses: ₹7.0 lakhs
Subtotal PGBP: ₹16.7 lakhs

Income from Other Sources:
Interest on Fixed Deposit (gross): ₹0.8 lakhs
Subtotal: ₹0.8 lakhs

Income from Capital Gains:
Long-term Capital Gains on property sale: ₹9.2 lakhs

Total Income before losses: ₹26.7 lakhs

Loss Adjustments:

The loss from Partnership Firm B of ₹1.1 lakhs is an ordinary business loss from a retail business. Per Section 71, ordinary business losses can be set off against income of any other source. This loss is deducted from total income.

Computation of Gross Total Income:
Total Income: ₹26.7 lakhs
Less: Ordinary Business Loss (Partnership B): (₹1.1) lakhs
Gross Total Income: ₹25.6 lakhs

Loss Carried Forward:

The speculative business loss of ₹4.0 lakhs from intra-day trading in shares (no delivery taken) cannot be set off in the current year. Per Section 43(5), intra-day trading without delivery is speculative business. Per Section 73(2), speculative loss can only be set off against speculative business income. As there is no speculative business income, this loss cannot be adjusted in the current year and must be carried forward for 4 years under Section 73A.

Non-Deductible/Non-Taxable Items:

Loss on Betting (₹0.20 lakhs): Not deductible. Income from betting/games of chance is excluded from taxable income; consequently, losses on betting are also not deductible or adjustable.

Interest on Self-Occupied House Repair (₹1.2 lakhs): Not deductible. Per Section 24(a), interest deduction is available only for income-producing properties. Interest on loan for repair of self-occupied house does not qualify as no income is generated from such property.

Forfeited Advance on Property Sale (₹5.0 lakhs): This is a capital receipt, not taxable as income. Since the sale transaction fell through (buyer failed to comply with conditions of sale), the advance received and subsequently forfeited does not constitute income from any taxable source.

Summary: Gross Total Income ₹25.6 lakhs with Speculative Business Loss of ₹4.0 lakhs to be carried forward for 4 assessment years.

Part (a): GST paid on goods purchased from Diya LLP and subsequent return

Purchase on 21-03-2024:
Goods purchased: ₹105 lakhs (excluding GST)
GST @ 18%: ₹105 lakhs × 18% = ₹18.9 lakhs

ITC claim: ₹18.9 lakhs is eligible as Input Tax Credit under Section 16 of the CGST Act 2017. Justification: Aryan is engaged in retail business; goods are for business purpose; Diya LLP is a registered supplier (turnover ₹8 crores exceeds the GST registration threshold); valid tax invoice is available; and ITC eligibility conditions are satisfied. The ITC would be claimed in the month of purchase (March 2024, FY 2023-24).

Return on 20-07-2024 with refund on 20-02-2025:
Returned goods value: ₹5 lakhs
GST on returned goods: ₹5 lakhs × 18% = ₹0.9 lakhs

ITC Reversal: The ITC of ₹0.9 lakhs claimed on the returned goods must be reversed. Under Section 16 of the CGST Act 2017, when goods are returned, the proportionate ITC is reversed. The reversal would be recorded in July 2024 (month of return), which falls in FY 2024-25.

Net ITC Position:
ITC claimed on purchase: ₹18.9 lakhs (FY 2023-24)
ITC reversed on return: ₹0.9 lakhs (FY 2024-25)
Net ITC available to Aryan: ₹18 lakhs (for goods retained)

TDS Implications: No TDS is applicable on this purchase transaction as TDS provisions apply to service payments and specified payments, not on purchase of goods.

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Part (b): TDS implications on catering services payment to Mr. Kulveer

Payment Details:
Monthly payment: ₹77,000
Annual payment: ₹77,000 × 12 = ₹9,24,000

TDS Analysis:
Mr. Kulveer is a resident individual. The TDS provisions under the Income Tax Act 1961 applicable to service payments are:

1. Section 194J (Fees for technical services): Applicable only to non-residents. Not applicable here as Kulveer is a resident.

2. Section 194C (Payment to contractors): Typically applies to contract work in construction, demolition, and similar activities. Catering services do not fall within the scope of contract work under Section 194C.

3. Section 194O (Specified goods and services): Introduced w.e.f. 1-7-2022, provides for 1% TDS on specified goods and specified services. However, catering services are not included in the list of "specified services" notified under this section.

Conclusion: No TDS is applicable on the catering services payment to Mr. Kulveer. The payment does not satisfy the conditions under any applicable TDS section.

ITC Implications on Catering Services:
Assuming the catering service is subject to GST (typically at 5% for specified catering services or 18% for restaurant services), ITC on GST paid would be available. For example, if GST @ 5% applies: GST amount = ₹9,24,000 × 5% = ₹46,200. This ITC of ₹46,200 would be eligible as input tax credit under Section 16 of the CGST Act 2017 since it's incurred for business purposes. The ITC would be claimed in the months when invoices are received.

Transaction (i) - Supply to Jnara Enterprises, Rajasthan (₹2,00,000)

This is an inter-state supply of goods. The taxable value must be reduced by the pre-agreed discount. Although the discount was given by credit note on 28th February 2025, the pre-agreed discount of 10% (₹20,000) is deductible as per Section 15 of the CGST Act, 2017. Taxable value = ₹1,80,000. Place of supply is the destination state (Rajasthan), making it an inter-state supply subject to IGST at the applicable rate.

Transaction (ii) - Receipt of Machinery from Bikaner, Rajasthan

This is a purchase of capital equipment (machinery). Input tax credit is fully eligible under Section 17(5) of the CGST Act, 2017, as inputs used in the course of business are covered. The supply is from another state (inter-state), subject to IGST. No ITC restriction applies to capital goods used directly in business.

Transaction (iii) - Supply of Machinery to Cool & Co., Kerala (₹6,00,000)

A critical point: Although Cool & Co. is registered in Kerala, the machinery is installed in Tamil Nadu as per agreement. As per Section 12 of the CGST Act, place of supply for goods is determined by the location of goods at the time of supply. Since the goods are located in Tamil Nadu at the time of supply, place of supply is Tamil Nadu, making this an inter-state supply subject to IGST, not SGST. The buyer's registration location is irrelevant for goods; the physical location of goods determines the place of supply.

Transaction (iv) - Online Educational Journals to St. Peters High School, Kerala (₹25,000)

This supply is likely exempt from GST under Schedule II, Notification No. 12/2017 (Central Tax), which exempts books and educational materials. Educational journals, being educational content, fall within the exemption. Since the supply is made within Kerala (intra-state), it would otherwise be subject to SGST, but exemption applies. No GST is payable. ITC is not applicable as no tax is charged.

Transaction (v) - Renting of Commercial Property, Thrissur, Kerala (₹70,000)

Renting of immovable property is a taxable supply under Schedule II. The fact that Mr. Karan is an independent director of Safe Volt Limited does not provide exemption. The place of supply is the location of the immovable property (Thrissur, Kerala), making it an intra-state supply subject to SGST and CGST (typically at 5% + 5% = 10% total, or as notified rate). Consideration has been received, and there is no exemption for related parties in property renting.

Transaction (vi) - Office Uniforms to Rasoul Tea Estate, Munnar, Kerala (₹2,00,000)

This is a straightforward taxable supply of goods within the same state (intra-state supply subject to CGST and SGST). Uniforms are generally taxed at 5% (CGST 2.5% + SGST 2.5%, or as per current notification). No exemption applies. Standard GST compliance applies.

Transaction (vii) - Construction Service Payment to Contractor, Bengaluru (₹1,25,000)

This is a supply of construction service for immovable property (staff quarters at Kochi). Although the contractor is from Bengaluru, the place of supply is determined by the location of the immovable property under Section 12(5)(i) of the CGST Act, which is Kochi, Kerala. However, since the service provider is in Karnataka and the recipient is in Kerala, this is an inter-state supply subject to IGST.

Input tax credit is available and eligible under Section 17(5) of the CGST Act for construction services used in the course of business. The fact that staff quarters are capitalized in the books as a fixed asset and no depreciation is charged does not disqualify ITC. Construction services for capital goods used in business premises remain eligible for input tax credit. The staff quarters constitute business use (employee amenity on business premises).

Summary Table:
| Transaction | Nature | Place of Supply | GST Type | Rate/Exemption | ITC Eligible |
|---|---|---|---|---|---|
| (i) | Inter-state goods | Rajasthan | IGST | Applicable | Yes (if consumed) |
| (ii) | Inter-state machinery purchase | Rajasthan | IGST | Applicable | Yes |
| (iii) | Inter-state machinery supply | Tamil Nadu | IGST | Applicable | N/A (supply) |
| (iv) | Educational journals | Kerala | SGST/CGST | Exempt | No |
| (v) | Property renting | Thrissur, Kerala | SGST/CGST | 5% (typical) | No (exempt supply) |
| (vi) | Goods supply | Munnar, Kerala | SGST/CGST | 5% | N/A (supply) |
| (vii) | Construction service | Cochi, Kerala (inter-state) | IGST | Applicable | Yes |

Mr. Karan — GST Analysis for February 2023 (Registered Supplier, Kochi, Kerala)

(i) Goods supplied to Jaara Enterprises, Bengaluru — Discount Treatment

The goods originate from Kochi, Kerala and the movement terminates at Bengaluru, Karnataka. Under Section 10(1)(a) of the IGST Act 2017, the place of supply for goods involving movement is where the movement terminates — Karnataka. Since the supplier (Mr. Karan) is in Kerala and place of supply is Karnataka, this is an inter-state supply and IGST is applicable.

Regarding discounts, under Section 15(3) of the CGST Act 2017: (a) The 10% trade discount shown on the invoice is deductible from the taxable value — this satisfies Section 15(3)(a) as it is established before or at the time of supply and reflected on the invoice. (b) The post-supply discount of ₹2,00,000 given via credit note dated 28th February is deductible under Section 15(3)(b) only if: (1) it was established by agreement before or at the time of supply ✓ (pre-agreement exists), (2) it is specifically linked to the relevant invoice ✓, and (3) the recipient (Jaara Enterprises) reverses ITC proportionate to the discount. The credit note issued on 28th February is within the time limit under Section 34 of CGST Act (before 30th September of the following financial year). If the ITC reversal condition is satisfied, ₹2,00,000 is excluded from taxable value.

(ii) Machinery supplied to Cool & Co. (registered in Kerala), installed at Tamil Nadu

Where the supply involves installation or assembly at site, Section 10(1)(d) of the IGST Act 2017 applies — the place of supply is the place of installation, i.e., Tamil Nadu. Location of supplier (Mr. Karan) = Kerala; place of supply = Tamil Nadu. This is an inter-state supply — IGST is applicable on ₹6,00,000. The fact that Cool & Co. is registered in Kerala is irrelevant since the specific rule for installation overrides the general rule.

(iii) Online educational journals to St. Peters High School, Kerala

Place of supply: Since the recipient school is in Kerala and the supplier is in Kerala, this would ordinarily be an intra-state supply attracting CGST + SGST. However, supply of online educational journals or periodicals to an educational institution providing education up to higher secondary school is exempt under Entry 66(b) of Notification No. 12/2017-Central Tax (Rate). St. Peters High School qualifies as an educational institution under the GST framework. GST payable = NIL on ₹25,000.

(iv) Renting of commercial property at Thrissur to Safe Volt Limited

For services directly relating to immovable property, Section 12(3) of the IGST Act 2017 provides that the place of supply is the location of the immovable property — Thrissur, Kerala. Location of supplier (Mr. Karan) = Kerala; place of supply = Kerala → intra-state supply, CGST + SGST applicable on ₹70,000.

Mr. Karan is an independent director of Safe Volt Limited, making them related persons under the CGST Act. Accordingly, the value of supply must be determined as per Rule 28 of the CGST Rules 2017 — at open market value, or at value of similar supply, or 110% of cost of provision of service. The declared consideration of ₹70,000 must be validated against open market value.

(v) Office uniform supplied to Rasool Tea Estate, Munnar (Kerala)

Both the supplier (Mr. Karan, Kochi) and the recipient (Rasool Tea Estate, Munnar) are in Kerala. This is an intra-state supply — CGST + SGST applicable on ₹2,00,000. Place of supply = Kerala under Section 10(1)(a) of IGST Act (movement terminates in Kerala).

(vi) Payment to Mr. Manish (Bengaluru contractor) for construction of staff quarters at Kochi

Mr. Karan is the recipient of works contract services here. Services relating to immovable property attract place of supply rules under Section 12(3) of IGST Act — place of supply = Kochi, Kerala (location of immovable property). Location of supplier (Mr. Manish) = Karnataka; place of supply = Kerala → inter-state supply, IGST applicable.

Most critically, ITC is blocked for Mr. Karan under Section 17(5)(c) and (d) of the CGST Act 2017: Section 17(5)(c) blocks ITC on works contract services used for construction of immovable property (other than plant and machinery), and Section 17(5)(d) blocks ITC on goods/services received for construction of immovable property on own account even if used in the course of business. Since staff quarters have been capitalised in the books of accounts, Mr. Karan cannot claim ITC of GST paid on ₹1,25,000. The blocked ITC becomes part of the cost.

Note: The question provides only brought-forward losses without current-year income details for Subhi. The answer below addresses the set-off rules, carry-forward eligibility, and regime comparison based on the information given. If current-year income figures were part of the full case, they should be applied against the rules explained below.

Brought Forward Losses and Their Treatment for AY 2025-26 (Old Regime — Opted Out of Default Tax Regime)

Loss 1 — Long Term Capital Loss (LTCL) from Unlisted Shares: ₹3,80,000 (pertaining to AY 2024-25)

Governed by Section 74 of the Income Tax Act, 1961. A brought-forward LTCL can be set off only against Long Term Capital Gains (LTCG) of the current year. It cannot be set off against Short Term Capital Gains (STCG). If no or insufficient LTCG is available in AY 2025-26, the unabsorbed LTCL is carried forward. The maximum carry-forward period is 8 assessment years. Since this loss pertains to AY 2024-25, it can be carried forward up to and including AY 2032-33. Accordingly, assuming no LTCG in AY 2025-26, the full ₹3,80,000 continues to be carried forward.

Loss 2 — Loss from Owning and Maintaining Race Horses: ₹25,000 (pertaining to AY 2024-25)

Governed by Section 74A of the Income Tax Act, 1961. Loss from the activity of owning and maintaining race horses has a unique restriction — it can be set off only against income from the same activity (i.e., income from owning and maintaining race horses). It cannot be set off against any other income. The carry-forward period is limited to 4 assessment years from the year in which the loss was incurred. Since the loss pertains to AY 2024-25, it can be carried forward up to AY 2028-29. Assuming no income from race horses in AY 2025-26, ₹25,000 continues to be carried forward.

Gross Total Income of Subhi for AY 2025-26 (Old Regime): Since only brought-forward losses (and no current-year income) are specified, Gross Total Income = Nil. Both losses remain unabsorbed and are carried forward within their permissible periods.

Amount of Loss that Cannot be Carried Forward: Since both losses are within their respective carry-forward limits (8 years for LTCL under Section 74; 4 years for race horse loss under Section 74A), the amount that cannot be carried forward = Nil.

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Will the answer be different under the Default Tax Regime (Section 115BAC)?

No, the answer will not be materially different. Section 115BAC of the Income Tax Act, 1961 restricts certain deductions and exemptions but does not restrict the carry-forward and set-off of Long Term Capital Losses or losses from the activity of owning and maintaining race horses. The specific restriction in Section 115BAC(2) pertains to loss under the head 'Income from House Property', which is not applicable here. Capital gains are taxable under the new regime as well, and the set-off mechanism under Section 74 (LTCL against LTCG) remains operative. Similarly, Section 74A is a stand-alone provision not curtailed by Section 115BAC. Therefore, both brought-forward losses — ₹3,80,000 (LTCL) and ₹25,000 (race horse loss) — are treated identically under both the old and the new (default) tax regime for AY 2025-26.

Advance tax is not required to be paid by the following categories of persons as per Section 209 of the Income Tax Act, 1961:

1. Persons with estimated income below the basic exemption limit - If a person's total estimated income for the financial year does not exceed the maximum amount not chargeable to tax, advance tax is not required. The exemption limits are: ₹2,50,000 for individuals (general); ₹5,00,000 for resident senior citizens aged 60-80 years; and ₹5,00,000 for very senior citizens above 80 years of age. Similarly, the limits apply to HUF, firms, companies, and other persons based on their respective categories.

2. Resident individuals whose sole income is salary with adequate tax deduction at source - A resident individual whose only source of income is salary and whose employer is required to deduct tax at source under Section 192, is not required to pay advance tax provided the tax deducted at source is adequate to cover the total tax liability for the year. The employer acts as the collecting agent, making separate advance tax unnecessary.

3. Persons with only agricultural income - Since agricultural income is exempt from taxation under Section 10(1), a person whose income comprises solely of agricultural sources is not required to pay advance tax, as no tax is payable on such income.

4. Non-residents - Non-residents are generally not subject to advance tax requirements in the same manner as residents, as different tax treatment provisions apply to them under Chapter XII-A of the Act.

5. Persons covered under special tax provisions - Persons falling under special chapters, such as those subject to specific provisions for undisclosed income or other specialized tax regimes, may be exempt from regular advance tax requirements under those specific provisions.

Answer to (i): TRUE

Section 139(5) of the Income Tax Act, 1961 explicitly provides that any person who has made a statement of income or loss in a return may revise such return only once. The revision must be filed before the end of one year from the end of the relevant assessment year. The statute uses the phrase "may... revise such return" (singular) which legally restricts revision to a single occasion. Once a revised return is filed, it cannot be revised again. This is a fixed restriction and no further revision is permissible even within the due date.

Answer to (ii): FALSE

The statement contains a double negative: "cannot not be filed" which literally means "can be filed." This contradicts the actual legal position. Section 139(5A), as amended by the Finance Act 2021, permits filing of an updated return in cases where the person discovers an error, income omission, or incomplete disclosure in the original return. However, Section 139(5A) explicitly restricts the filing of updated return if the original return was filed under Section 139(3) (i.e., by a person carrying on business or profession). Therefore, if the original return is a loss return filed under Section 139(3), an updated return under Section 139(5A) cannot be filed. The statement's claim that it "cannot not be filed" (i.e., can be filed) is therefore incorrect.

E-way Bill Generation Requirements under Rule 13(1) of CGST Rules, 2017:

An E-way bill is a mechanism to track movement of goods in transit. Rule 13(1) mandates generation of an E-way bill when goods are transported with a value exceeding ₹50,000 in a single invoice/bill of supply. The movement must be in the nature of inter-state supply or an intra-state movement where the goods are transported to another state or place.

Key requirements include: (i) E-way bill must be generated in FORM GST EWB-01 before commencement of movement of goods; (ii) it can be generated by the supplier, recipient, or transporter; (iii) generation is done through the e-way bill portal (www.ewaybillgst.gov.in); (iv) mandatory details include GSTIN of supplier and recipient, HSN code, quantity, taxable value, GST amount, mode of transport, vehicle number, and validity period; (v) the validity of the e-way bill is based on distance traveled (1 day for up to 100 km, 2 days for 101-200 km, and so on, with a maximum of 10 days).

E-way Bill in "Bill to Ship to" Model (Supply on behalf of Third Person):

The "Bill to Ship to" model refers to situations where the goods are billed to one party but physically shipped to a different location or recipient. This is common in supply chain arrangements where a supplier invoices one entity (Bill to party) but delivers goods to another location (Ship to party).

In such cases, the principal (the person on whose behalf the goods are being transported) is authorized to generate the E-way bill. The supplier or the person arranging the transport must include in the E-way bill: (i) the details of the actual recipient (Ship to party); (ii) the place of delivery; (iii) the intermediate handling of goods, if any. The E-way bill in this model serves to track the actual movement of goods from the supplier's warehouse to the final destination (Ship to location) rather than to the billing address.

This provision ensures transparency in goods movement and prevents misuse of transportation by maintaining a clear record of where goods are actually destined, even if invoiced to a different party. The e-way bill portal allows entry of separate consignee details for such transactions, ensuring compliance with GST regulations.

Nature of Restriction under Rule 869, CGST Rules 2017:

Rule 869 of the CGST Rules, 2017 imposes a critical restriction on the utilization of Electronic Credit Ledger (ECL) when the value of taxable supplies in a month exceeds ₹50 lakhs. The fundamental nature of this restriction is that when a registered person's taxable turnover surpasses this threshold in any month, the amount available in the Electronic Credit Ledger cannot be used for payment of tax liability. Instead, the taxpayer must discharge their tax obligations through direct bank transfer or other prescribed payment modes. This restriction applies to payment of CGST, SGST, and UTGST liabilities.

The rationale behind this restriction is to ensure steady and direct tax collection from high-turnover dealers (particularly service providers) and to prevent excessive accumulation and utilization of credit balances that could impede government revenue realization.

Exceptions to Rule 869 Restrictions:

The restriction on ECL utilization does not apply in the following cases:

1. ITC on Goods: Where the amount in the Electronic Credit Ledger represents Input Tax Credit attributable to goods, such credit can be utilized for payment of tax liability irrespective of the ₹50 lakh limit.

2. Goods Supplies: When the taxable supplies made by the registered person are of goods (as distinguished from services), the ECL restriction is not applicable, and such credit can be freely used for tax payment.

3. Zero-Rated Supplies: In cases involving zero-rated supplies (including supplies for export), the taxpayer is permitted to use the available ECL for settling tax liabilities.

4. Export-Related Supplies: Supplies of goods for export outside India are exempt from this ECL restriction.

5. Notified Commodities and Categories: The Central Government may, through notification, exempt specific commodities or categories of registered persons from the operation of this restriction.

6. Refund Adjustment: Use of ECL for adjustment against refund claims or other permissible adjustments (outside direct tax payment) remains unrestricted.

Analysis of Additional Information for GST Computation of Mr. Karan

(i) Supply of ₹13,000 Against Food Coupons (Pizza Coupons — Kochi Food Court)

The coupons issued in December 2024 are for a specific Pizza — meaning the nature of supply is identifiable at the time of issue. Under Section 12(5)(a) of the CGST Act, 2017, for a voucher where the supply is identifiable at the time of issue, the time of supply is the date of issue of the voucher (i.e., December 2024). Accordingly, GST liability would have already arisen and been discharged in December 2024. The actual supply of ₹13,000 made against these coupons in the current month does NOT constitute a fresh taxable event. Therefore, ₹13,000 shall be excluded from outward taxable supplies for the current period to avoid double taxation.

Note: These are Single-Purpose Vouchers (SPV) since the goods (specific Pizza) and the applicable GST rate can both be determined at the time of issue.

(ii) Green Tax of ₹10,000 Charged in Invoice to Rasgul Tea Estate (Mannar)

Green Tax is a statutory levy imposed under a law other than the GST law. Under Section 15(2)(a) of the CGST Act, 2017, any taxes, duties, cesses, fees, and charges levied under any other law, which are charged separately, shall form part of the value of taxable supply. Accordingly, the Green Tax of ₹10,000 shall be added to the transaction value and GST (CGST @ 9% + SGST @ 9%, assuming intra-state supply as per point (vii)) shall be computed on the aggregate value inclusive of Green Tax. Mr. Karan cannot exclude Green Tax from the taxable value.

(iii) RCM on Renting of Immovable Property by Mr. Karan (Director) to the Company

Mr. Karan's accountant advised that since he is a director of the company to which he has let out property, the company shall pay GST under Reverse Charge Mechanism (RCM). This advice is CORRECT.

Under Notification No. 13/2017 — Central Tax (Rate), Entry No. 6, services supplied by a director of a company or body corporate to the said company or body corporate are notified under Section 9(3) of the CGST Act, 2017 for RCM. The renting of immovable property by Mr. Karan (who is a director) to the company constitutes a service supplied by a director to the company. The fact that the service is of the nature of 'renting' does not take it out of the ambit of this entry.

Consequently: (a) The company (recipient) is liable to pay GST under RCM; (b) Mr. Karan shall not charge GST in the invoice for this supply; (c) Mr. Karan shall not have an output tax liability on this transaction; (d) The company may claim ITC of the tax paid under RCM, subject to conditions under Section 16 of the CGST Act, 2017.

(iv) ITC Utilization — Opening Balances and Order of Set-off

Opening ITC balance: IGST ₹1,50,000 | CGST ₹30,000 | SGST ₹Nil.

As per Section 49A and Section 49B of the CGST Act, 2017 read with Rule 88A of CGST Rules, 2017, the order of utilization is: IGST credit is first utilized against IGST liability, then against CGST, and then against SGST liability. CGST credit can be used against CGST liability first, then IGST. SGST credit against SGST first, then IGST. Cross-utilization of CGST against SGST or vice versa is not permitted.

Since inward supplies are intra-state (as per point (vii)), ITC on inward supplies will be CGST and SGST. Combined with the opening IGST credit of ₹1,50,000 and CGST of ₹30,000, the order of set-off must be strictly followed while computing net GST payable.

PART (a): Mr. Karan — GST Liability for February 2025

Item (i): Supply against Food Coupon — ₹13,000
As per Section 12(4) of CGST Act, 2017, where the voucher relates to a supply that is identifiable at the time of issue, the time of supply is the date of issue of the voucher. Since the food coupon was issued in December 2024 for a specific pizza, GST was due and payable in December 2024 itself. No GST liability arises in February 2025 on this ₹13,000.

Item (ii): Green Tax of ₹10,000 on Supply to Rasool Tea Estate, Mumbai
As per Section 15(2)(a) of CGST Act, 2017, any taxes, duties, cesses, fees or charges levied under any law other than CGST/SGST/IGST/GST Compensation Cess laws are includible in the value of taxable supply. Green Tax (a local levy) is therefore part of taxable value. The supply is from Kochi (Kerala) to Mumbai (Maharashtra), making it an inter-state supply under Section 7 of IGST Act, 2017. IGST @ 18% on ₹10,000 = ₹1,800 (interstate liability — reduces IGST ITC balance, not directly part of intrastate liability computation).

Item (iii): Property let out to company where Mr. Karan is Director
As per Notification No. 13/2017-Central Tax (Rate), services supplied by a director of a company or body corporate to that company or body corporate fall under Reverse Charge Mechanism (RCM). The accountant's advice is correct. The company (recipient) is liable to pay GST under RCM. Mr. Karan has no GST collection or payment obligation on this transaction.

ITC Utilization Framework (Sections 49A and 49B of CGST Act, 2017):
Opening ITC: IGST ₹1,50,000 | CGST ₹30,000 | SGST Nil.
Order: (1) IGST ITC → IGST liability; (2) Balance IGST ITC → CGST liability; (3) Balance IGST ITC → SGST liability; (4) CGST ITC → CGST liability; (5) SGST ITC → SGST liability. Given the large IGST opening credit of ₹1,50,000, it is likely that net intrastate CGST and SGST cash outflows are significantly reduced. The precise net intrastate liability requires the primary transaction table (not provided in the question extract).

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PART (b): ABC Corporation Pvt. Ltd. — February 2025 GST Liability

(1) Inter-State Sale of Taxable Goods — ₹2,00,000 (₹50,000 advance in January 2025)
Under Section 12(2)(b) of CGST Act, 2017 (applicable via Section 20 of IGST Act, 2017), time of supply = earlier of invoice date or date of receipt of payment. The ₹50,000 advance was received in January 2025 → time of supply for ₹50,000 = January 2025 (already taxed). Balance ₹1,50,000 is taxable in February 2025. Being an inter-state supply, IGST @ 18% applies. IGST = ₹27,000.

(2) Accommodation Services in Mumbai — ₹18,000/person/month (min. 99 days)
The charge of ₹18,000 per month equates to approximately ₹600 per day. Under Notification No. 11/2017-Central Tax (Rate), SAC 9963, accommodation services where the value per unit per day does not exceed ₹7,500 are taxable at 12% (CGST 6% + SGST 6%). The 99-day continuous period does not convert commercial accommodation into 'renting of residential dwelling' under Entry 12 of Notification 12/2017-CT(Rate); that exemption applies to bona fide residential dwelling leases, not commercial accommodation services. Being intra-state (Mumbai): CGST = ₹1,080; SGST = ₹1,080.

(3) Pure Labour Contract for Repair of Single Residential Unit — ₹50,000
Entry 10 of Notification 12/2017-Central Tax (Rate) exempts pure labour contracts for 'construction, erection, commissioning, or installation of original works' pertaining to a single residential unit (not part of a residential complex). 'Original works' refers to new construction and does not include repair. Repair services under pure labour contracts are therefore taxable. Rate applicable: 18% (CGST 9% + SGST 9%). Being intra-state: CGST = ₹4,500; SGST = ₹4,500.

(4) Professional Fees to Ms. Udas Medin, Non-Taxable Territory — ₹70,000 (Inter-State)
Under Section 5(3) of IGST Act, 2017 read with Notification No. 10/2017-Integrated Tax (Rate), services supplied by a person in a non-taxable territory to a recipient in the taxable territory are taxable under RCM. ABC Corporation (recipient) is liable to pay IGST under RCM. IGST under RCM = ₹12,600. ABC Corporation is also eligible to avail ITC of ₹12,600 (conditions satisfied per question assumption).

Net GST Liability of ABC Corporation — February 2025:

Gross IGST = ₹27,000 (outward) + ₹12,600 (RCM) = ₹39,600
Less ITC — IGST (RCM credit) = ₹12,600
Net IGST payable in cash = ₹27,000

Gross CGST = ₹1,080 + ₹4,500 = ₹5,580; No ITC available
Net CGST payable in cash = ₹5,580

Gross SGST = ₹1,080 + ₹4,500 = ₹5,580; No ITC available
Net SGST payable in cash = ₹5,580

Total Net GST payable in cash = ₹27,000 + ₹5,580 + ₹5,580 = ₹38,160

*Note: Previous year turnover of ₹2 Crore confirms ABC Corporation is a regular (non-composition) taxpayer. E-invoicing is not mandatory (threshold: ₹5 Crore).*

Determination of Input Tax Credit (ITC) available to Veer Trading Private Limited (VTPL) for February 2025

All transactions are intra-state; hence CGST and SGST are applicable. The eligibility of ITC is governed by Section 16 of the Central Goods and Services Tax Act, 2017 (CGST Act) read with Section 17(5) (blocked credits) and relevant rules.

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(i) Reimbursement of Sports Club Membership Fees — ₹20,000

GST paid = ₹20,000 × 12% (6% CGST + 6% SGST) = ₹2,400

ITC: NIL. Under Section 17(5)(b)(ii) of the CGST Act, ITC is specifically blocked on membership of a club, health and fitness centre. A local sports club falls squarely within this blocked category. The fact that the MD took the membership on behalf of the company does not alter the nature of the supply. Since VTPL does not make any outward taxable supply of the same category, no exception applies.

Eligible ITC = ₹Nil

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(ii) Equipment Purchased on Ex-Works (EXW) Basis — ₹10,00,000

GST paid = ₹10,00,000 × 12% (6% CGST + 6% SGST) = ₹1,20,000

Under Section 16(2)(b) of the CGST Act, one of the conditions for availing ITC is that the registered person must have received the goods. Under an EXW contract, risk and title transfer when the supplier hands the goods to the transporter at the supplier's place of business. The OEM handed the equipment to the transporter on 28th February 2025, and by the proviso to Section 16(2)(b), when goods are delivered by the supplier to any person on the direction of the registered recipient (including a transporter), before or during movement of goods, it shall be deemed that the registered person has received the goods. Physical receipt on 2nd March 2025 is irrelevant. Since deemed receipt occurred on 28th February 2025, ITC is available in February 2025.

Eligible ITC = ₹1,20,000

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(iii) Event Management Services from M/s Daksh Event — ₹2,50,000 (inclusive of food ₹40,000)

The invoice includes two components: event service (₹2,10,000) and food charges (₹40,000).

As per Section 17(5)(b)(i) of the CGST Act, ITC is blocked on food and beverages, outdoor catering, unless the registered person uses such inward supply for making an outward taxable supply of the same category or as an element of a taxable composite or mixed supply. VTPL is a wholesale trader and does not make any outward supply of food or catering services; hence, the exception does not apply.

Food component (₹40,000): GST = ₹40,000 × 28% (14% CGST + 14% SGST) = ₹11,200 → ITC blocked under Section 17(5)(b)(i).

Event service component (₹2,10,000): GST = ₹2,10,000 × 18% (9% CGST + 9% SGST) = ₹37,800 → ITC eligible, as event management services for a customer's meet constitute a business purpose and are not covered under any blocked category.

Eligible ITC = ₹37,800

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(iv) Purchase of Motor Vehicle for Transport of Goods — ₹14,00,000

GST paid = ₹14,00,000 × 28% (14% CGST + 14% SGST) = ₹3,92,000

Section 17(5)(a) of the CGST Act blocks ITC only on motor vehicles for transportation of persons having approved seating capacity of ≤ 13 persons. A vehicle used for transportation of goods (e.g., truck/lorry) is not blocked under this provision.

Regarding Section 16(3) of the CGST Act — ITC is not available if depreciation has been claimed on the tax component (GST) of capital goods under the Income Tax Act, 1961. Here, depreciation of ₹2,10,000 is computed on ₹14,00,000 (the cost of the vehicle, exclusive of GST) at 15%. Since depreciation has not been claimed on the tax component (GST of ₹3,92,000), Section 16(3) restriction does not apply.

Eligible ITC = ₹3,92,000

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Summary of Eligible ITC for February 2025:

| Item | GST Paid (₹) | Eligible ITC (₹) |
|------|-------------|------------------|
| (i) Sports Club Membership | 2,400 | Nil |
| (ii) EXW Equipment | 1,20,000 | 1,20,000 |
| (iii) Event Management (Event portion) | 37,800 | 37,800 |
| (iii) Event Management (Food portion) | 11,200 | Nil |
| (iv) Vehicle for Goods Transport | 3,92,000 | 3,92,000 |
| Total Eligible ITC | | ₹5,49,800 |

Total ITC that can be availed by VTPL for February 2025 = ₹5,49,800

(a) Registration Liability of Mr. Venkatesh

As per Section 22(1) of the CGST Act, 2017, every supplier is liable to register if his aggregate turnover in a financial year exceeds ₹20 lakh (₹10 lakh for special category states). Tripura is a special category state; Rajasthan is a normal state.

'Aggregate turnover' as defined under Section 2(6) of the CGST Act, 2017 means the aggregate value of all taxable supplies, exempt supplies, exports of goods or services, and inter-state supplies of persons having the same PAN, computed on an all-India basis, excluding CGST, SGST, IGST, and Compensation Cess.

Two inclusions require attention:
- Sales as agent (₹1,00,000): Supplies made by Mr. Venkatesh as agent of Ganesh Enterprises are part of his taxable supplies and thus form part of his aggregate turnover.
- Non-taxable goods (₹2,00,000): As per Section 2(47) of the CGST Act, 'exempt supply' expressly includes non-taxable supply. Hence, non-taxable goods are included in aggregate turnover.

Aggregate Turnover = ₹11,00,000 + ₹5,00,000 + ₹1,00,000 + ₹2,00,000 = ₹19,00,000

Threshold Analysis:
- Rajasthan (normal state) — threshold ₹20,00,000: Aggregate turnover ₹19,00,000 < ₹20,00,000. Not independently liable.
- Tripura (special category state) — threshold ₹10,00,000: Aggregate turnover ₹19,00,000 > ₹10,00,000. Liable to register.

Since Mr. Venkatesh makes taxable supplies from Tripura (a special category state) and his all-India aggregate turnover exceeds ₹10 lakh, he is liable to be registered. As per Section 25(1) of the CGST Act, a person liable to be registered shall apply for registration in each State or Union territory from which he makes taxable supplies. Therefore, Mr. Venkatesh must obtain separate GST registrations in both Rajasthan and Tripura.

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(b) Place of Supply — Independent Cases

(i) Mr. Mikul — Transportation of Household Goods (Ranchi to Jodhpur)

Fastman Couriers Pvt. Ltd. is a GST-registered courier. Mr. Mikul is an individual (bank manager) and is not registered under GST.

As per Section 12(8)(b) of the IGST Act, 2017, the place of supply of services by way of transportation of goods to a person other than a registered person shall be the location at which such goods are handed over for their transportation.

Mr. Mikul's family and household goods are at Ranchi, Jharkhand. Goods are handed over to Fastman Couriers at Ranchi.

Place of Supply = Ranchi, Jharkhand

The supplier (Fastman Couriers) is located in Kolkata, West Bengal. Since the supplier's location (West Bengal) ≠ place of supply (Jharkhand), this is an inter-state supply and IGST shall be levied.

(ii) M/s Ravi Builders — Architectural Services for Building in Canada

Both the supplier (M/s Builder and Co., Ahmedabad, Gujarat) and the recipient (M/s Ravi Builders, Pune, Maharashtra) are located in India and are registered under GST. Hence, Section 12 of the IGST Act, 2017 applies.

As per Section 12(3) of the IGST Act, 2017, the place of supply of services provided directly in relation to an immovable property — including services by architects, engineers, surveyors, and other experts — shall be the place where the immovable property is located or intended to be located.

The 21-floor building is to be constructed in Canada.

Place of Supply = Canada (outside India)

Since the place of supply is outside India, GST (IGST) shall not be levied on this transaction. The supply may qualify as 'export of services' under Section 2(6) read with Section 16(1) of the IGST Act, 2017 (zero-rated supply), subject to fulfilment of conditions — particularly that payment is received in convertible foreign exchange or Indian rupees wherever permitted by RBI.

PART (1): COMPUTATION OF AGGREGATE TURNOVER

Aggregate Turnover (AT) is defined under Section 2(1)(a) of the CGST Act, 2017 as the aggregate value of all supplies of goods and services (including exempt supplies), excluding supplies specified in Section 15(1).

For Mr. Venkatesh, AT shall be computed as follows:

Inclusions:
1. All intra-state taxable supplies in Rajasthan (goods and services including the ₹50,000 commission)
2. All intra-state taxable supplies in Tripura (goods only, after excluding the reverse charge supply)
3. Commission from insurance agent (₹50,000): INCLUDED. This is a taxable supply of service under SAC 9987. Commission from insurance agents is explicitly taxable and forms part of AT.
4. Sale as agent for Ganesh Enterprises: INCLUDED in full value. Since the invoice was issued in the name of Mr. Venkatesh (not in the principal's name), Venkatesh is treated as the supplier for GST purposes. The entire value is included in his AT.

Exclusions:
Inward supply of service on reverse charge (₹1,00,000) in Tripura: EXCLUDED from AT as per Section 15(1) of CGST Act, 2017. Supplies on which the recipient is liable to pay tax under the reverse charge mechanism (RCM) are specifically excluded from AT. This applies to inward supplies of services where Venkatesh, as recipient, is liable to self-assess and pay tax.

Note: Without the complete statistics table (intra-state supplies figures in both Rajasthan and Tripura), the exact aggregate turnover amount cannot be computed. However, the formula is: AT = (All taxable supplies in Rajasthan + All taxable supplies in Tripura) - ₹1,00,000 (RCM supply) + Commission ₹50,000

PART (2): LIABILITY FOR REGISTRATION

Registration under GST is mandatory when aggregate turnover exceeds the threshold specified by the GST Council.

Applicable Thresholds:
- Rajasthan: ₹40 lakhs (general threshold)
- Tripura: ₹20 lakhs (special category state – North Eastern State)

Decision:
Mr. Venkatesh shall be liable for registration if his computed Aggregate Turnover exceeds ₹20 lakhs (the lower threshold applicable to Tripura, where he has operations). Since he is conducting business in both states, he requires registration in each state separately if the AT exceeds the respective thresholds. For registration in Tripura specifically, the threshold is ₹20 lakhs. As a practical matter, if AT exceeds ₹20 lakhs, registration becomes mandatory at least in Tripura and likely in Rajasthan (if AT > ₹40 lakhs). The principal place of business location would determine the primary registration threshold to apply. If AT > threshold, registration is compulsory within 30 days of exceeding the limit (under Section 22 of CGST Act, 2017).

Case (i): Transportation of Household Goods by Fastman Couriers

The place of supply is Ranchi, Jharkhand (where the household goods are located at the time of commencement of transportation).

Under Section 12 of the CGST Act, 2017, for transportation of goods, the place of supply is determined by the location of the goods at the time the transportation service begins. Here, Mikul's household goods are at Ranchi (where his family resides) when Fastman Couriers picks them up. Although the goods are ultimately transported to Jodhpur and Fastman is registered in Kolkata, the supply of transportation service originates from Ranchi. The location of the supplier (Kolkata) or the destination (Jodhpur) is not the determinant factor; it is the location where the conveyance of goods commences. Therefore, Ranchi is the place of supply, and GST will be liable in Jharkhand as per Rule 2(1) of Place of Supply Rules, 2017.

Case (ii): Architectural Design Services by M/s Builder and Co.

The place of supply is Canada (the location of the immovable property for which services are rendered).

Under Section 12(3)(b) of the CGST Act, 2017, where a service is supplied in relation to an immovable property, the place of supply is the location of the immovable property itself, not the location of the service provider or the recipient. M/s Builder and Co. is providing architectural design services in respect of a 21-floor building to be constructed in Canada. Since the immovable property is located in Canada (outside the taxable territory of India), this transaction is treated as an export of services. Consequently, the supply is eligible for zero rate of tax under Section 5(2) of the CGST Act, 2017, read with Rule 3(b) of Place of Supply Rules, 2017. No GST is payable within India for this service, provided proper export documentation is maintained.

Note: The question references 'Additional Information', which indicates primary supply figures for Mr. Venkatesh were part of the original case scenario but are not reproduced here. The answer below correctly treats all three additional items under Section 2(6) of the Central Goods and Services Tax Act, 2017 (CGST Act) and demonstrates the full methodology.

(1) Computation of Aggregate Turnover of Mr. Venkatesh

Aggregate Turnover is defined under Section 2(6) of the CGST Act, 2017 as the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable on reverse charge basis), exempt supplies, exports of goods or services or both, and inter-State supplies of persons having the same PAN, computed on all-India basis, excluding taxes charged under CGST, SGST, IGST, and Cess.

Treatment of each item under Additional Information:

Item (i) — Commission received as insurance agent in Rajasthan: ₹50,000
Services provided by insurance agents to insurance companies are taxable under Reverse Charge Mechanism (RCM) — GST is paid by the insurance company (recipient), not Mr. Venkatesh. However, the exclusion in Section 2(6) applies only to inward supplies on which tax is payable under RCM. The commission of ₹50,000 is an outward supply (supply of service by Mr. Venkatesh to the insurance company). Therefore, ₹50,000 is included in aggregate turnover.

Item (ii) — Inward supply under RCM in Tripura: ₹1,00,000
This is an inward supply on which tax is payable by Mr. Venkatesh under reverse charge. Section 2(6) expressly excludes such supplies from aggregate turnover. Therefore, ₹1,00,000 is excluded from aggregate turnover.

Item (iii) — Sale by Mr. Venkatesh as agent for Ganesh Enterprises; invoice issued in Mr. Venkatesh's name
Under GST, where an agent makes supplies on behalf of the principal:
- If the invoice is issued in the agent's name → the full value of the supply is included in the agent's aggregate turnover.
- If the invoice is issued in the principal's name → only the commission/fee earned by the agent is included.
Since the invoice is issued in the name of Mr. Venkatesh, the entire sales value (not just commission) made on behalf of Ganesh Enterprises is included in his aggregate turnover.

Aggregate Turnover = (Other taxable/exempt/inter-state supplies from main data) + ₹50,000 [commission, item i] + Full value of agent sales [item iii] — ₹1,00,000 [inward RCM, item ii excluded]

(2) Liability to Register under GST

Under Section 22 of the CGST Act, 2017, every supplier whose aggregate turnover in a financial year exceeds the prescribed threshold limit is liable for mandatory registration.

The applicable thresholds are:
- Normal States (including Rajasthan): ₹20 lakhs for services; ₹40 lakhs for exclusive goods suppliers
- Special Category States (including Tripura): ₹10 lakhs

Since Mr. Venkatesh operates in Rajasthan (normal state) and Tripura (special category state under Article 279A), and aggregate turnover is computed on an all-India basis with a single PAN, the applicable threshold is determined by the state where his principal place of business is located.

If Mr. Venkatesh's aggregate turnover exceeds ₹20 lakhs (or ₹10 lakhs if his principal place of business is in Tripura), he is liable to be registered mandatorily. The inward RCM supply (₹1,00,000) being excluded, and commission (₹50,000) plus full agent sales being included, the final determination depends on the total computed figure vis-à-vis the applicable threshold.

Conclusion: Mr. Venkatesh is liable for GST registration if his all-India aggregate turnover (including ₹50,000 commission + full value of agent sales for Ganesh Enterprises, excluding ₹1,00,000 inward RCM) exceeds the applicable threshold limit under Section 22.

Yes, the answer will change materially. The change depends on whether the original Question 2 addressed the Composition Scheme eligibility under the GST framework.

Under Rule 9(1) of the CGST Rules 2017, a crucial restriction states that a supplier is NOT eligible to opt for the Composition Scheme if they have made any inter-state supplies in the preceding financial year. This is an absolute disqualification, regardless of turnover or other eligibility criteria.

Original Scenario (Q2 - likely): If Mr. Vanakkash was engaged in both inter-state and intra-state supplies of cement goods, he would be INELIGIBLE for the Composition Scheme due to the inter-state supply restriction, even if his turnover fell within the ₹1 crore threshold.

New Scenario: If Mr. Vanakkash is engaged ONLY in intra-state supply of cement goods with all other information remaining the same, the inter-state supply disqualification no longer applies. Therefore, the answer changes to ELIGIBLE for the Composition Scheme, subject to:

1. Total turnover in preceding FY does not exceed ₹1 crore (as applicable for manufacturers of goods under Rule 9)
2. No other disqualifying conditions exist (e.g., supplies under reverse charge, supplies of exempted goods with ITC claim)
3. The supplies remain exclusively intra-state throughout the FY

The critical distinction is that the Composition Scheme eligibility is all-India neutral for intra-state supplies but excluded entirely if any inter-state supplies occur. Restricting operations to intra-state supplies removes the primary disqualifying factor, fundamentally altering the eligibility conclusion.