Question 1

Determine the aggregate turnover of Bali Bells for the month of September.

Accepted Answer

**Answer: (B) ₹95,00,000**

**Calculation of Aggregate Turnover for September:**

Aggregate turnover under Section 2(b) of the CGST Act, 2017 includes the aggregate value of all **taxable supplies and exempt supplies** in the course of business, but excludes supplies outside the scope of GST.

**Supplies to be Included:**

1. **Intra-State Outward Supplies:**
   - Taxable supplies: ₹40,00,000
   - Exempt supplies: ₹15,00,000
   - Subtotal: ₹55,00,000

2. **Inter-State Outward Supplies:**
   - Taxable supplies: ₹30,00,000
   - Exempt supplies: ₹10,00,000
   - Subtotal: ₹40,00,000

**Supplies to be Excluded:**

1. **Sale of Land (₹2,00,00,000):** Land is specifically excluded from the scope of GST as per Schedule I of the CGST Act, 2017. Supplies of land and building (except construction services) are outside the ambit of GST and therefore excluded from aggregate turnover.

2. **Machinery Purchase (₹1,00,000):** Purchases and capital acquisitions are inward supplies, not outward supplies. Only outward supplies are counted in aggregate turnover. This is not relevant to calculating aggregate turnover.

3. **Tax Invoice dated 25th July:** This pertains to ITC eligibility and a prior financial year; it does not constitute an outward supply in September.

4. **Free Samples in October:** Distributed in October, not September, hence excluded from September's calculation.

5. **November Supply:** Falls outside September and is therefore excluded.

**Final Calculation:**
Aggregate Turno…

Question 2

Examine the implications of GST on payment of honorarium to the Guest Anchors.

Accepted Answer

**GST Applicability on Honorarium to Guest Anchors:**

Honorarium paid to guest anchors constitutes **consideration for supply of service** under Section 7 of the CGST Act 2017. Anchoring services are professional services and are therefore subject to GST unless specifically exempted.

**Registration Threshold Implications:**
Under Section 24 of the CGST Act 2017, a guest anchor is required to register for GST if their aggregate turnover during a financial year exceeds ₹40 lakhs (₹20 lakhs in specified special category states like Himachal Pradesh, Uttarakhand, J&K, and North-Eastern states). The key implication is that: (a) If a single engagement or aggregate of multiple engagements exceeds the threshold, registration becomes mandatory; (b) All payments from different broadcasters/employers must be aggregated to determine threshold; (c) Registration is voluntary below the threshold but advisable to claim input tax credit.

**GST Charging and Rate:**
Once registered or if aggregate turnover exceeds threshold, the guest anchor must issue a GST invoice and charge GST at **18%** on honorarium (professional service rate under CGST Act). The invoice must contain HSN Code 9989 (Other professional, scientific and technical services n.e.c.).

**TDS Implications:**
Under Section 51 of the CGST Act 2017, **TDS at 4%** is mandatory on payments to unregistered suppliers. If the guest anchor is unregistered or below threshold, the broadcaster must deduct TDS. However, if the guest anchor …

Question 3

Bali Bells wants to avail ITC on GST paid on the heavy steel machinery purchased in September. Which of the following statements is true in this regard?

Accepted Answer

**Answer: (C)**

The issue pertains to the availability of **Input Tax Credit (ITC)** on capital goods when depreciation is claimed on the GST amount under the Income-tax Act, 1961.

**Applicable Rule**: **Rule 43 of CGST Rules 2017** governs ITC on capital goods in two parts:

**Rule 43(1)** states: "The input tax credit on goods or services used as capital goods shall **not** be allowed to the extent to which depreciation is availed on the tax paid on such capital goods under the Income-tax Act, 1961."

**Rule 43(2)** states: "The input tax credit on such capital goods shall be allowed for each financial year on **pro-rata basis in line with the depreciation availed thereon** under the Income-tax Act, 1961."

**Application to this case**:

Bali Bells capitalized the machinery (₹1,00,000) AND the GST (₹18,000) separately in its books and claimed depreciation on both components. This means the company has claimed depreciation on the GST amount, triggering the Rule 43 restriction.

However, Rule 43(2) clarifies that ITC is **not completely denied**. Instead, ITC is allowed on a **pro-rata basis in line with the depreciation claimed in each financial year**.

Therefore, in the current financial year, the ITC on GST shall be allowed **only to the extent of the depreciation claimed on that GST amount during the current year**. If, for example, the company claims depreciation of ₹2,700 on the GST of ₹18,000 in the current year (assuming 15% WDV depreciation rate), then ITC of ₹2,7…

Question 4

Whether Bali Bells can avail ITC on the free samples of goods distributed in the month of October?

Accepted Answer

**Answer: (C)**

Bali Bells cannot avail ITC on the free samples distributed in October because Section 17(5) of the CGST Act, 2017 explicitly blocks such credit.

Under Section 17(5) of the CGST Act, 2017, **input tax credit is not available on goods or services supplied free of cost or at concessional rate in the course or furtherance of business**, except where such supply is made in compliance with any law for the time being in force. Since Bali Bells distributed free samples without consideration to customers for promotional purposes, the ITC on inputs/goods used for manufacturing or acquiring these samples is statutorily blocked.

**Why other options are incorrect:**

Option (A) is wrong because ITC is NOT universally available on supplies made without consideration. The law specifically restricts such credit.

Option (B) is partially correct in reasoning (absence of consideration does matter) but fails to cite the precise legal provision under the CGST Act that mandates this restriction.

Option (D) is incorrect because free samples distributed for promotion ARE considered to be in the course or furtherance of business. The restriction is not based on business nexus but specifically on the absence of consideration.

Question 5

Bali Bells can claim ITC on inputs received in July of preceding financial year upto ___________ of the current financial year.

Accepted Answer

**Answer: (A) 30th November**

Under Rule 36(4) of the CGST Rules, 2017, a taxable person can avail input tax credit on an invoice relating to inward supply issued in any financial year till **the end of November following the end of that financial year or when the annual return for that financial year is furnished, whichever is earlier**. In this case, the invoice is dated 25th July of the preceding financial year (FY 2024-25). Therefore, the time limit for claiming ITC on this invoice in the current financial year (FY 2025-26) would be till 30th November 2025 or when the annual return for FY 2024-25 is filed, whichever is earlier. Since Bali Bells Ltd. will furnish its annual return for the preceding financial year only in December of the current financial year (after 30th November), the effective deadline for claiming ITC on the July invoice is **30th November** of the current financial year. This is a fixed statutory limit that applies regardless of when the annual return is subsequently filed.

Question 6

Compute the value of supply under section 15 of the CGST Act, 2017 made by Bali Bells in the month of November.

Accepted Answer

**Answer: (A) ₹ 45,000**

The value of supply under Section 15 of the CGST Act, 2017 is determined as follows:

**Basic Price:** ₹ 45,000 (stated as before TCS)

**Treatment of TCS (Tax Collected at Source):** TCS of ₹ 2,500 is levied by the supplier under the Income Tax Act, 1961. Under Section 15(3) of the CGST Act, 2017, **the value of supply shall NOT include the amount of any taxes, duties, or cesses (other than CGST, SGST, IGST, UTGST) that are actually paid or payable by the recipient IF such taxes are separately stated in the invoice.** Since the case explicitly mentions "Basic price of the product before TCS" and separately identifies TCS of ₹ 2,500, the TCS is clearly separately stated. Being a tax on the recipient (the buyer), TCS must be **excluded** from the value of supply. Therefore, TCS is not added to the value.

**Treatment of Subsidy:** The subsidy of ₹ 3,500 received from Bharat Foundation Pvt. Ltd. is **explicitly stated to be for usage of green energy linked to units of energy saved and NOT relatable to the aforesaid product (the supply).**  Under Section 15(2)(d) of the CGST Act, the value includes subsidies that are **relatable to the supply**. Since this subsidy is expressly non-relatable to the product supplied, it cannot be included in the value of supply. Therefore, the subsidy is **not added**.

**Conclusion:** Value of supply = ₹ 45,000 (Basic price) – TCS excluded per Section 15(3) – Non-relatable subsidy excluded.

Question 7

Chill Ltd., Delhi, a registered supplier, manufacturing machineries has made a taxable supply of machinery during the month of March. It furnished the following details for each such machinery supplied:

(i) List price of machinery (exclusive of taxes): ₹ 10,00,000
(ii) Subsidy received from the Central Government for supply of machinery to Government School (exclusively related to supply at S. No. 1): ₹ 2,10,000
(iii) Subsidy received from an NGO for supply of machinery to an old age home (exclusively related to supply at S. No. 1): ₹ 2,00,000
(iv) Tax levied by Municipal Authority: ₹ 2,50,000
(v) Packing charges: ₹ 1,25,000

The list price is after considering both subsidies. Other charges/taxes are charged over and above the list price.

Purchases/services availed in respect of said mac…

Accepted Answer

**Answer: Net GST Payable = ₹44,967**

**COMPUTATION OF VALUE OF SUPPLY:**
According to Section 15 of CGST Act, 2017, value of supply includes the invoice price, taxes/duties levied by law (excluding GST), charges for services, and subsidies directly related to the supply.

List price (post-subsidy): ₹10,00,000
Add: Subsidy from Central Government (directly related): ₹2,10,000
Add: Subsidy from NGO (directly related): ₹2,00,000
Add: Municipal Authority tax: ₹2,50,000
Add: Packing charges: ₹1,25,000
**Total Value of Supply: ₹17,85,000**

**OUTPUT GST:**
Since all supplies are inter-State, IGST @ 18% applies.
IGST = ₹17,85,000 × 18% = **₹3,21,300**

**INPUT TAX CREDIT (ITC) ANALYSIS:**

**(1) Raw Material – GST ₹8,50,000:** Not eligible. Goods to be received in April, not received in March. Under Section 16(1), ITC is available only when goods are received. **ITC = ₹0**

**(2) Club Membership – GST ₹4,00,000:** Not eligible. Listed in Schedule III (Negative List) of CGST Act. Membership not obligatory under law. **ITC = ₹0**

**(3) Inputs in 6 lots (1st received) – GST ₹3,50,000:** Total GST ₹3,50,000 for all 6 lots; only 1st lot received in March. **ITC = ₹3,50,000 ÷ 6 = ₹58,333.33**

**(4) Trucks (Transport Service) – GST ₹1,50,000:** Input service for transporting raw material. Eligible for ITC. **ITC = ₹1,50,000**

**(5) Capital Goods – Total GST ₹3,50,000:** 3 items total; invoices missing for 2 items (GST ₹2,82,000). Only 1 item has invoice. Under Section 16(4), invoice i…

Question 8

Comment on the following with reference to relevant GST provisions:

Accepted Answer

**Part (a) - Eden Ltd. (₹18 crore turnover)**

The tax consultant's advice to issue e-invoices mandatorily is **valid**, and Eden Ltd.'s understanding is incorrect. While the aggregate turnover threshold for mandatory e-invoicing under GST is ₹20 crore (as per Rule 47 of CGST Rules, 2017, effective April 1, 2023), the applicability of e-invoicing is not limited solely to this threshold criterion.

**Key reasons supporting the consultant's advice:**
(1) **B2B supplies criterion**: E-invoicing is mandatory for all B2B (Business-to-Business) supplies for registered persons regardless of their aggregate turnover. Even though Eden Ltd.'s aggregate turnover is ₹18 crore (below the ₹20 crore threshold), if it is supplying goods/services to other registered persons or businesses, e-invoicing becomes mandatory.

(2) **Nature and category of supplies**: Certain categories of supplies may have separate e-invoicing requirements independent of the aggregate turnover threshold.

(3) **Voluntary compliance advantage**: Even if e-invoicing were discretionary, issuing e-invoices provides better audit trail, real-time tracking, and reduced compliance risk.

**Conclusion**: The consultant's advice is correct. Eden Ltd. must issue e-invoices for its B2B supplies, notwithstanding the aggregate turnover being ₹18 crore. The ₹20 crore threshold applies to overall mandatory requirement, but B2B supplies require e-invoicing regardless of turnover limits.

**Part (b) - Government Department (₹22 crore…

Question 9

Batra Ltd., a normal taxpayer, is winding up its business in Rajkot. The Tax Consultant of Batra Ltd. has suggested that Batra Ltd. will have to file either the annual return or the final return at the time of voluntary cancellation of registration in the State of Rajkot. Do you agree with the stand taken by Tax Consultant of Batra Ltd.? Offer your comments. Ignore the aggregate turnover of Batra Ltd.

Accepted Answer

**I DISAGREE with the tax consultant's suggestion.** The phrasing 'either annual return or final return' is misleading as it implies a choice or discretion, which does not exist.

**Statutory Requirement:** When a registered person applies for voluntary cancellation of GST registration, the filing obligation is **specifically a FINAL RETURN**, not a choice between two alternatives.

**Legal Basis:** Under **Rule 38(1) of CGST Rules 2017**, when a registered person applies for cancellation of registration, they must file a **final return in FORM GSTR-3B** for the period commencing from the date on which the last return was filed or the date from which they became liable to pay tax, whichever is later, till the date of cancellation of registration.

**Key Distinctions:**

**Annual Return (GSTR-9):** This is filed at the end of each financial year (31st March) for businesses continuing throughout the year. It is intended for ongoing registered persons.

**Final Return (GSTR-3B):** This is filed when a registered person cancels their registration before the end of a financial year. It covers the period remaining till the date of cancellation.

**Application to Batra Ltd.:** Since Batra Ltd. is winding up its business and voluntarily cancelling its registration in Rajkot **mid-year** (before 31st March), it will file a **FINAL RETURN in FORM GSTR-3B**, not an annual return. This is a **mandatory requirement** and not optional.

**Timing:** The final return must be filed **along wi…

Question 10

Mr. Shyam Nath, a registered person has caused movement of goods of consignment value exceeding ₹ 50,000 in relation to a supply and thus, generated e-way bill. However, after generation of e-way bill, he found a mistake in the e-way bill and wants to edit it. You are required to advise Mr. Shyam Nath whether he can do so with the help of relevant provisions.

Accepted Answer

**Advise:** Mr. Shyam Nath **cannot edit the e-way bill after generation**. Once an e-way bill is generated and activated in the system, it becomes a final document and the EWAYBILL portal does not permit any modifications or edits to it.

**Why Editing Is Not Permitted:** The e-way bill is treated as a critical compliance document under the GST regime, similar to an invoice. Allowing post-generation edits would compromise the integrity of the compliance trail and create potential for misuse. Therefore, the system architecture deliberately blocks editing after generation.

**Remedy Available - Cancellation and Re-generation:** The appropriate course of action available to Mr. Shyam Nath is to **cancel the incorrectly generated e-way bill and generate a fresh e-way bill** with the correct details. The following procedure applies:

**Cancellation Process:** Mr. Shyam Nath (as the registered person/supplier) or the authorized transporter can cancel the e-way bill through the EWAYBILL portal by providing valid reasons. The system allows cancellation within a specified timeframe from the date of generation.

**Key Requirements for Cancellation:**
- The e-way bill must not have been already cancelled
- The movement of goods should not have been completed
- A cancellation reason must be selected from the prescribed list (error in details, goods not moved, etc.)

**After Cancellation:** Once the e-way bill is cancelled, it becomes inactive and can no longer be used for moving goods. …

Question 11

Mrs. Kashish, a resident individual, aged 62 years, is a qualified medical practitioner. She runs her own clinic. Income & Expenditure A/c of Mrs. Kashish for the year ending 31.3.2023 is as under:

Expenditure: Salary to Staff ₹ 7,20,000; Administrative Exp. ₹ 11,64,000; Rent of clinic ₹ 5,76,000; Conveyance Expenses ₹ 1,44,000; Power & Fuel ₹ 1,44,000; Interest on Housing Loan ₹ 2,20,000; Interest on Education Loan for son ₹ 1,56,000; Amount paid to scientific research association approved & Notified under section 35 ₹ 1,50,000; Net profit ₹ 55,34,000; Total ₹ 88,08,000.

Income: Consultation Fees ₹ 74,28,000; Salary received from True Care Hospitals (P) Ltd. ₹ 10,80,000; Rental Income from House Property ₹ 2,40,000; Dividend from Foreign Companies (gross) ₹ 60,000; Total ₹ 88,08,000.

A…

Accepted Answer

**Computation of Total Income and Tax Liability of Mrs. Kashish for A.Y. 2023-24**

**I. Income from Salary**

Basic Pay (₹85,000 × 12): ₹10,20,000; Transport Allowance (₹5,000 × 12): ₹60,000; Gross Salary: ₹10,80,000. Medical treatment of son at True Care Hospitals (P) Ltd. — treatment at **employer's own hospital is exempt** and not a perquisite under Section 17(2) of the Income Tax Act, 1961. Less: **Standard Deduction u/s 16(ia)**: ₹50,000. **Income from Salary = ₹10,30,000.**

**II. Income from House Property**

The house has two equal-area floors. Ground floor = self-occupied (SOP) from 01.10.2022; first floor = let out from 01.10.2022 at ₹40,000 rent + ₹3,000 power back-up charges (composite rent ₹43,000/month). Power back-up charges form part of composite rent and are included in Gross Annual Value. The generator fuel of ₹10,000 (in I&E) is not deductible from HP income — only standard deduction (30%) and interest are allowable under Section 24.

Housing loan of ₹25 lakhs was borrowed on 01.04.2022 and reconstruction completed 30.09.2022 — both in the same P.Y. 2022-23. The 31st March immediately preceding completion is 31.03.2022, which falls **before** the borrowing date (01.04.2022). Therefore the pre-construction period is **nil** and the entire interest of ₹2,20,000 is deductible in P.Y. 2022-23 itself under Section 24(b).

*First Floor — Let Out (50%):* GAV = ₹43,000 × 6 months = ₹2,58,000 [actual rent adopted as GAV per Section 23(1)(c) since property was under…

Question 12

Who is authorized to verify the return of income of the following assessees?

Accepted Answer

**Verification of Return of Income - Authorized Persons**

Section 140 of the Income Tax Act, 1961 requires every return of income to be verified by the assessee in the prescribed manner. However, in certain circumstances where the assessee cannot personally verify, specific authorized persons are empowered to do so:

**(a) HUF whose Karta is absent from India:** When the Karta of a HUF is absent from India, the return can be verified by **any adult member of the HUF** who is duly authorized by the Karta or possesses authority under the HUF deed. If no specific authorization exists, the **senior-most adult member** of the HUF may verify the return on behalf of the HUF. This ensures continuity of compliance despite the Karta's temporary absence.

**(b) Company being wound up:** During winding up proceedings, the return is verified by the **Liquidator** appointed under the Companies Act, 2013. The Liquidator assumes complete control and authority over the company's affairs during liquidation and represents the company for all legal and fiscal matters, including income tax verification and filing.

**(c) Local authority:** The return of a local authority (such as Municipal Corporations, Gram Panchayats, or Zilla Parishads) is verified by the **Chief Executive Officer (CEO) or the officer duly authorized by the local authority**. The authorized officer, typically the Commissioner or Chief Administrator, represents the local authority and verifies the return in the prescribed mann…

CA Inter Cost & Mgmt

Drill 5 questions from this paper — instant grading

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap