Page 15 - Chap7 ITC

vi During the month of October, 20XX, the company purchased 10 mobile phones in its name and distributed
to the employees to enable them to perform their duties more efficiently for the company. Total price of the
phones was ₹ 1,20,000. At the end of the month, company sold these mobiles to employees and company
recovered only ₹ 20,000 from the employees. Assume that it is intra-State transaction.

vii The company's registered office is located in a building which belongs to the local Municipality. The
monthly rent is ₹ 1.50 lakh.

viii The whole-time director of the company was paid a salary of ₹ 5 lakh during the month. He was also paid ₹
20,000 towards sitting fees for his participation in the meeting.

Give a brief note to support your treatment for the items wherever required.
Note: Company wants to pay minimum amount of SGST as far as possible. [CA Final July 21 Exam] [CA
Final MTP Oct 24]
Answer:
1) Computation of ITC available with MS Ltd. for October 20XX:

IGST (₹) CGST (₹) SGST (₹)
Particulars
In lakhs In lakhs In lakhs
Eligible credit on inputs and input services for the month [Given] 145 20 20
Ball bearings stolen [Note 1] (0.45) - -

Mobile phones purchased for employees [Note 2] - 0.108 0.108
(1.2*9%) (1.2*9%)

Rent paid to Municipality 0.135 0.135
(1.5 *9%) (1.5 *9%)

Sitting fee paid to whole time director - 0.018 0.018
(0.20*9%) (0.20*9%)

Total ITC 144.55 20.261 20.261

2) Computation of Tax payable under Reverse charge:
Particulars IGST (₹) CGST (₹) SGST (₹)
In lakhs In lakhs In lakhs

Rent paid to Municipality [Note 3] - 0.135 0.135
(1.5*9%) (1.5*9%)

Sitting fee paid to whole time director [Note 4] - 0.018 0.018
(0.20*9%) (0.20*9%)

Total tax payable under Reverse charge - 0.153 0.153
3) Computation of Output GST liability of MS Ltd. for October 20XX:
Particulars IGST (₹) CGST (₹) SGST (₹)
In lakhs In lakhs In lakhs

GST liability for main product [Given] 72 54 54
After-sales discount on a product [Note 5] - Nil Nil
Sale of van used for personal transport by auction - 0.135 0.135
(1.5*9%) (1.5*9%)

Transportation cost charged on the product [Note 6] 0.72 0.54 0.54
(4*18%) (6*9%) (6*9%)

Food and beverages supplied to the employees [Note 7] - 0.45 0.45
(5*9%) (5*9%)

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