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MCQ Self Challenge #0097 on Applicability of GST

 

Applicability of GST

 

Dear Professional Seniors & Friends,
Warm Greeting!

Here is the Next post of #MCQ on concept based practical professional knowledge on applicability of GST in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 97.1: Sri Krishna Charitable trust, registered under section 10 (23C) (v) of the Income-tax Act manages a temple in Shahdara, Delhi. It has given on rent a community hall, located within temple premises, to public for celebration of New Year evening. Rent charged is Rs 9,500.

A. GST Payable but on Reverse Charge Basis
B. No GST is Chargeable as renting of Community Hall up to Rs 1,00,00 per month
C. No GST is payable on Rent collected up to Rs 10,000 per day
D. None of the Above

MCQ 97.2: ABC Consultancy, registered in Mumbai, supplies technical consultancy services to its clients. It has been providing technical services to XY Ltd., Mumbai since past two years. Consideration is settled by XY Ltd assignment wise. XY Ltd. paid Rs 45 lakh to ABC Consultancy on 10th January, 2018 on ABC consultancy agreeing to not provide similar technical services to any other business entity in India or abroad for a period of 8 years. It may be noted that XY Ltd. is not ready to pay any further amount to ABC Consultancy in addition to the amount already agreed. What would be the Taxable Amount (if any) in the above case (Tax Rate-18%)?

A. No GST Applicable
B. GST Applicable with Taxable Value Rs 45,00,000
C. GST Applicable with Taxable Value Rs 38,13,559
D. None of the Above

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CA Sanjay Kumar Agrawal
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Answer MCQ Self Challenge #0097

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on provisions relating to Applicability of GST

 

Answer MCQ 97.1: C. No GST is payable on Rent collected up to Rs 10,000 per day.

 

Answer MCQ 97.2: C. GST Applicable with Taxable Value   Rs. 38,13,559

 

Practical Analysis of MCQ 97.1:

  • Renting of community hall by Krishna seva charitable trust is exempt from GST, as rent is less than 10,000 per day. The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017/ Notification No. 9/2017 IT (R) dated 28.06.2017 has exempted the said service wholly from GST.
  • The said notification provides exemption to services by a person inter alia by way of renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a trust or an institution under section 10(23C)(v) of the Income-tax Act . However, this exemption does not apply where renting charges of premises, community halls, kalyanmandapam or open area are Rs 10,000 or more per day.

 

Based on the above Analysis, Answer to MCQ 97.1: C. No GST is payable on Rent collected up to Rs 10,000 per day.

 

Practical Analysis of MCQ 97.2:

 

  • The scope of supply is defined by section 7(1) of CGST Act, 2017. It includes deemed supply given under Schedule II. The paragraph 5(e) of Schedule II provides that agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is treated as supply of service.

 

 

  • Thus, any consideration received for agreeing to the obligation to refrain from an act, is subject to GST. Consideration received for non-compete agreement is deemed as consideration for supply of services Consideration of Rs 45 lakh received on the promise of ABC consultancy of not providing similar services to any other person, is consideration for supply which is chargeable to GST.
  • Since GST is not separately collected, it will be assumed that it is included in `45 lakh. Rule 35 of CGST Rules, 2017 provides that where the value of supply is inclusive of GST, the tax amount is determined in the following manner:
  • Tax amount = (Value inclusive of taxes x GST rate in %) [IGST or CGST, SGST/UTGST] / (100 + sum of GST rates in %)
  • Consequently, value of taxable supply will be Rs. 38,13,559 (i.e., Rs 45,00,000 x 100/118).

 

Based on the above Analysis, Answer C). GST Applicable with Taxable Value Rs. 38,13,559

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

 

CA Sanjay Kumar Agrawal

Mobile: 9810116321

 

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

Webpage: http://www.casanjay.me/

Facebook: https://www.facebook.com/CA.Sanjay.K.Agrawal/

Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

 

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