6 - COMPUTATION OF TAXABLE VALUE AND GST

Illustration 3 (Value after Discount)

ABC Ltd. is a wholesaler selling tools like drills, etc. ABC sells the power drill to a trader TDR for
Rs. 4000 offering a 1% discount.

ABC Ltd. incurs Rs. 150 packing charges

To encourage prompt payment, ABC Ltd. offers additional 1% discount if TDR pays within 7
days.

Solution

Rs.
Power Drill 4,000
Packing charges 150
Discount @ 1% (on sale value) (40)
Subtotal 4,110
Add: CGST @ 9% 370
Add: SGST @ 9% 370
Total 4,850

Note: Additional discount of 1% is not deducted in the invoice because it will be given at the time of payment.
However, this discount was known at the time of supply, ad can be liked to specific invoice, the discount amount
can be reduced from the transaction value.

For this, ABC Ltd, will issue a credit note to TDR for Rs. 40 (1% of Rs. 4,000 = Rs. 40 + GST @ 18%
on Rs. 40 = Rs.7.20), and this must be linked to the relevant tax invoice.

Here discount has been given after supply. But it was agreed upon at the time of supply, so it
will be allowed to be deducted from transaction value.

Illustration 6 (Net GST Payable)

M/s. Raman & Co. purchased goods for Rs. 2,80,000 from outside the State. He sold goods for
Rs. 3,50,000 locally. Again he sold Rs. 1,00,000 worth of goods outside the State. He paid
telephone bill Rs. 10,000. He purchased an air conditioner for his office for Rs. 22,000 (locally).
If CGST is 9% and SGST is 9%, calculate net GST payable.
Solution

1. Calculation of Total Cost

Rs.
Goods purchased (Outside the State) 2,80,000
Telephone bills (local) 10,000
Air-conditioner purchased (local 22,000
Total Cost 3,12,000

2. Calculation of Net GST Payable

Particulars CGST SGST IGST
Output Tax Liability
CGST (3,50,000 x 9%) = 31,500 31,500
SGST (3,50,000 x 9%) = 31,500 31,500
IGST (1,00,000 x 18%) = 18,000 18,000
Less: Input tax credit
CGST (10,000 + 22,000) x 9%) = 2,880 (-) 2,880
SGST (10,000 + 22,000 x 9%) = 2,880 (-) 2,880
IGST (2,80,000 x 18%) = 50,400 (-) 28,620 (-) 3,780 (-) 18,000
Net GST Payable Nil 24,680 Nil

Note: Input tax credit of Rs. 50,400, IGST is available. This input tax credit should first be utilized for payment of
IGST of Rs. 18,000 and Rs. 28,620 is used for payment of CGST and balance Rs. 3,780 is to be used to pay SGST.

Illustration 10

Computation of Net GST liability-Inter/Intra-State purchase and Inter/Intra-State supply:

Gupta & Co., a registered dealer in Jaipur furnishes the following details of purchases and sales
pertaining to the month of December 2019.

Rs.
Goods ‘A’ purchased from local market (including GST @ 12%) 1,00,800
Goods ‘B’ purchased from Bhopal (including IGST @ 18%) 2,36,000
Sales made during the month to Dealer of Patna of Product:
(Cost + Profit)
A (90,000 + 10,800) 1,00,800
B (80,000 + 9,600) 89,600
Add: Profit margin @ 12% of cost (1,20,000 + 14,400)
Sales made within the State of product `B’
Above sales amount given is exclusive of tax. Compute the net CGST, SGST and IGST liability and
input tax credit, if any for the month of December 2019.
Solution
Computation of Net GST Liability

Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)

Inter-State Sale:
Goods `B’ sold to Patna (IGST @ 12%) (1,00,800x12%) --- --- 12,096
Goods ‘B’ sold to Patna (IGST @ 18%) (89,600 x 18%) --- --- 16,128
Intra-State Sale:
Goods `B’ sold within State (CGST/SGST @9% each)
(134,400 x 9%) 12,096 12,096 ---
Less: Eligible Input tax credit
[Rs. 1,00,800 x 100/112) x 12%] (-)5,400 (-)5,400 (-)36,000
Net amount of CGST / SGST / IGST 6,696 6,696 (-)7,776
Less: IGST used to set off payment liability of CGST and
SGST in order (-)6,696 (-)1,080 7,776
Net SGST Payable in Cash Nil 5,616 Nil

Illustration 13

Ram Kumar & Sons, Agra has made the following supplies during the month of July 2019 to its
customers:

Rs.
1. Groundnut Oil 2,50,000
2. Books 80,000
3. Sanitary wares 3,20,000
4. Chocolate and Sweets 92,000
5. Foodgrains to: Rs.
Flour Mills 2,20,000
Dealers of Agra 1,80,000
Local consumers 50,000 4,50,000

Sanitary goods of Rs. 80,000 has been supplied to a dealer of Delhi.

Calculate the taxable turnover and payable GST, if rates of CGST and SGST are 6% for each for
intra-State supplies.
Solution
Computation of Taxable Turnover

Rs.
1. Groundnut Oil 2,50,000
2. Books (Exempted) Nil
3. Sanitary wares 3,20,000
4. Chocolate and Sweets 90,000
5. Foodgrains (All supplies are exempted) Nil
Taxable Turnover 6,60,000
Calculation of GST Payable:
On intra-State supplies
(6,60,000 – 80,000) = Rs. 5,80,000
CGST = 5,80,000 x 6% 34,800
SGST = 5,80,000 x 6% 34,800 69,600
On inter-State supply:
Rs. 80,000 x 12% IGST 9,600
Total GST payable 79,200

Illustration 14

Kalpana Engg. Ltd. Bhopal has made an agreement to supply a machine for Rs, 6,50,000,
including following expenses:

Rs.
Packing Expenses 4,500
Design and drawings 16,500
Installation charges 20,000
Testing and inspection 15,000

The recipient has additionally been charged Rs. 35,000 for after sales services and Rs. 15,000 for
transportation of machine. Calculate taxable value and payable GST if its applicable rates are
12%.
Solution
Computation of Taxable Value of Machine

Particulars Rs.
Agreed supply value with stipulated expenses 6,50,000
Add: Expenses charged additionally from the recipient Rs.
(a) After sales services 35,000
(b) Transportation of Machine 15,000 50,000
Taxable Value 7,00,000
Calculation of GST Payable:
CGST 7,00,000 x 6% 42,000
SGST 7,00,000 x 6% 42,000
Total GST 84,000
Notes:
1. Expenses included in agreed value of machine have not been considered, in computation of taxable
value.
2. Expenses additionally charged from the recipient are to be included in taxable value.

Illustration 15

Shri Gopal of Jabalpur (MP), has made the following supplies for the month of July 2019.

Rs.
1. Exercise books and Graph books 75,000
2. Text Books 8,50,000
3. Stationeries 4,70,000
4. Visiting cards, etc. 78,000
5. Slate and chalk sticks 65,000
6. Religious pictures 35,000
7. News-papers and Magazines 2,85,000
8. Sports goods 2,75,000
9. News prints 4,85,000
10. Diaries ad calendars 1,75,000

The following additional information are given:

(a) Cash discount allowed Rs. 20,000 on supply of books.
(b) Sports goods have been supplied to a dealer of Agra.
(c) Rs. 8,300 has been charged additionally for truck freight against stationery.
(d) Sports goods of Rs. 1,50,000 have been supplied to Lucknow dealer.
(e) GST charged in the above supplies includes Rs. 58,000.

Compute taxable value of supply and GST payable @ 12%.

Solution
Computation of Taxable Value of Supplies
Rs.
1. Exercise books and Graph books 75,000
2. Text Books Exempt
3. Stationery and truck freight 4,78,300
4. Visiting cards, etc. 78,000
5. Slate and chalk sticks Exempt
6. Religious pictures 35,000
7. News-papers and Magazines Exempt
8. Sports goods 2,75,000
9. News prints 4,85,000
10. Diaries ad calendars, etc. 1,75,000
Total 16,01,300
Deduct: GST charged under bills -58,000
Net Taxable Value 15,43,300

Calculating of GST Payable

Supply of sports goods Rs. 2,75,000 is inter-State supply,
ISGST @ 12% x 2,75,000 = Rs.33,000 33,000
Rest of the supply (15,43,300 – 2,75,000) is Intra-State supply:
CGST = 12,68,300 X 6% 76,098
SGST = 12,68,300 x 6% 76,098 1,52,196
Total GST Payable 1,85,196
Notes:
1. Text-books, news-papers, magazines, slate and chalks are exempted.
2. GST charged under bills has been deducted to ascertain taxable value of the supplies on which GST is
calculated as per provisions.

Illustration 16

M/s. Prem Brothers is a cloth merchant. Following are the particulars of supplies by the dealer:

Rs.
1. Cloth 4,50,000
2. Rajai and Pillow Covers 1,00,000
3. Readymade Garments (From Mumbai) 60,000
4. Hosiery (Purchased from registered dealer of M.P., GST paid Rs. 1,000) 30,000
5. Towels and Gamache (S.P. Rs. 80 lakh) 65,000
6. Books 40,000
7. Exercise Books 3,00,000

Compute total and taxable supply of the trader. Value of Supply includes 5% GST.
Solution
Computation Turnover/Taxable Turnover

Turnover Taxable Turnover

Rs. Rs.
1. Cloth 4,50,000 4,50,000
2. Rajai and Pillow Covers 1,00,000 1,00,000
3. Readymade Garments 60,000 60,000
4. Hoisery 30,000 30,000
5. Towels and Gamachha 65,000 65,000
6. Books 40,000 Nil
7. Exercise Books 3,00,000 3,00,000
Value with GST 10,45,000 10,05,000
10,05,000 X 5 (-)47,857
Less: GST included: ( 105 )
= Rs. 47,857

Taxable Turnover 9,57,143

Illustration 18 (Net GST Payable)

XYZ Ltd. a registered dealer had input tax credit for CGST and SGST Rs. 750 and Rs. 1,050
respectively in respect of the purchase of inputs and capital goods. He manufactured 1800
litres of finished products 200 litres was a normal loss in the process. The final product was sold
at uniform price of Rs. 10 per litre as follows:

Goods sold within the State – 800 litres

Finished product sold in inter-State sale – 650 ltres
Goods sent on stock transfer to consignment agents outside the State – 350 litres

Further, CGST and SGST rate on the finished product of dealer is 6% and 6% respectively.
Further, IGST rate is 12%. Calculate tax liability of SGST and CGST to be paid after tax credit.
Solution

Output Tax Calculation

Particulars SalesStock Inter- Total

within
Transfer State
State
Outside Sales
(Rs.)State (Rs.)
(Rs.)
Qty. Supplied 800 350 650
Price / per unit X10 X10 X10
Value of Goods Supplied 8,000 3,500 6,500 18,000
Tax Amount: CGST (6%) 480 - - 480
Tax Amount: SGST (6%) 480 - - 480
Total Amount: IGST (12%) - 420 780 1,200
Calculation of GST Payable
Particulars CGST SGST (Rs.) IGST (Rs.) Total (Rs.)
(Rs.)
Tax Payable Amount 480 480 1,200 2,160
Less: Input Tax Credit CGST (B/F) (-) 480 - (-) 270 (-) 750
Input Tax Credit SGST (B/F) - (-) 480 (-) 570 (-) 1,050
Net GST Payable Nil Nil 360 360

Notes:
1. There would be no treatment for normal loss.
2. Input tax credit of CGST I.e., Rs. 750 is to be utilized for the payment of CGST of Rs. 480 and the balance of
Rs. 270 is to be utilized for the payment of IGST.
3. Similarly, input tax credit of SGST i.e. Rs. 1,050 is to be utilized for the payment of SGST of Rs. 480 and the
balance of Rs. 570 is to be utilized for the payment of IGST.
4. He is liable to pay the balance amount of IGST of Rs. 360 by cash (1,200 – 270 – 570 = 360). Since credit of
SGST of Rs. 570 has been utilized for payment of IGST, the State Government will get credit of Rs. 570
from the Central Government.

Illustration 19

Now, continuing with the above example, suppose the dealer purchases goods inter-State and
have input tax credit of IGST available is Rs. 2,000. Compute the tax payable.
Solution

Calculation of GST Payable

Particulars CGST SGST IGST Total

Rs. Rs. Rs. Rs.
Tax Payable Amount 480 480 1,200 2,160
Less: Input Tax Credit
CGST --- --- ---
SGST --- --- ---
IGST (-) 480 (-) 320 (-) 1,200 2,000
Net GST Payable --- 160 --- 160
Notes: Input tax credit of Rs, 2000, IGST is available. This input tax credit should first be utilized for payment of
IGST of Rs. 1,200 and balance of Rs. 800 is to be used first for payment of CGST of Rs. 480 and remaining
of Rs. 320 for SGST. He is liable to pay balance amount of SGST of Rs. 160 by cash.

Illustration 20 (Import)

ABC Ltd. imported goods for Rs. 20,000 and incurred expenses to produce final saleable goods.
BCD @ 10% was chargeable on imported goods. These manufactured goods were sold within
the State at Rs. 95,000 plus applicable GST. Rate of CGST and SGST is 6% and 6% respectively.
Compute Cost, Sale value and tax payable for the transaction.

Solution
Calculation of Net cost of Imported goods
Particulars Amount
Rs.
Cost of Goods Imported
Add: Basic Customs Duty @ 10% 20,000
Cost of imported goods (including BCD) 2,000
22,000
Add: CGST on Import @ 6% To make IGST applicable @ 12% 2,640
Add: CGST on Import @ 6%
Cost of imported goods (including BCD & IGST) 24,640

Calculation of Sale value after Import

Particulars Amount
Rs.
Sale Value (Before GST) 95,000
Add: CGST on Import @ 6% 5,700
Add: SGST on Import @ 6% 5,700
Sales Value 1,06,400
 Calculation of GST Payable
Particulars CGST SGST
Output tax
Less: Input tax credit 5,700 5,700
CGST (-) 2,640 ---
SGST --- ---
Net Tax Payable 3,060 5,700

Illustration 23

Rama Ltd. manufactured 5,000 fans during the month July 2019. As per price list, price is Rs.
1,700 per fan on which GST is separately chargeable. Rama Ltd. allows 20% discounts to
wholesalers on this list price.

During the month July 2019, fans sold to wholesalers were 2,850 and the retailers 1,750. While
400 unsold fans remained in stock as unsold. The applicable rate of GST is 12%.

Calculate the net GST payable by Rama Ltd. for the month assuming that in the inputs bought
for the manufacture of there 5,000 fans, included Rs. 70,000 as GST charged.

Solution

Computation of Taxable Value and GST

Particulars Amount
Rs.
Supply of Fans:
To wholesalers 2,850 x 1,700 less 20% 38,76,000
To retailers 1,750 x 1,700 29,75,000
Taxable Value 68,51,000
Gross GST payable @ 12%
6% CGST Rs.4,11,060
6% SGST Rs.4,11,060 8,22,120
Less: Input tax credit (-) 70,000
GST-Net Payable 7,52,120
Illustration 25
Manpasand Breweries, a bottler of cold drinks has made following supplies for the month of
July 2019:
1. Coca-Cola (in 1,500 ml plastic bottles, costing Rs. 5 per bottle, not returnable) 2 lakh pieces
@ Rs. 40 each.
2. 300 ml Coke (in glass bottles costing Rs. 2 each returnable) 5 lakh bottles @ Rs. 7 per bottle.
40,000 bottles are not returned till now.

Breweries has charged following expenses and cost of bottles under the bills separately.
(a) Transit insurance and freight Rs. 45,000
(b) Plastic bottles despatched in cartoons packing at a cost of Rs. 50,000
Distributors allowed 3% trade discount. 25,000 glass bottles of 300 ml have been distributed
as samples. Rate of GST on soft drinks in 28% and State compensation cess @ 15% is also
charged.

Solution
Computation of Taxable Value of Supply
(for the month of July 2019)

Particulars Amount (Rs.)

1. Coca-Cola in 1,500 ml plastic bottles
Supplied to distributers 2,00,000 bottles 80,00,000
(Rate per bottle Rs. 40 x 2,00,000)
2. Coke 300 ml in Glass Bottles
Supplied to distributors = 5,00,000
Distributed as samples = 25,000
(Rate charged per bottle Rs. 7 x 5,25,000) 36,75,000
Invoice Price 1,16,75,000
Less: 3% Trade Discount (-) 3,50,250
1,13,24,750
Add: Cost of glass bottles (Returnable) Hence, not charged Nil
Cost of Plastic Bottles (2,00,000 x 5) 10,00,000
Cost of Packing in Cartoons 50,000
Transportation and Insurance charges 45,000
Taxable Value of Supplies 1,24,19,750
Computation of GST Payable
Amount (Rs.)
GST Payable: Rs.
CGST = 1,24,19,750 x 14% 17,38,765
SGST = 1,24,19,750 x 14% 17,38,765 34,77,530
Add: Compensation Cess 1,24,19,750 x 15% 18,62,963
 Total GST Payable 53,40,493

Notes:
1. 25,000 Bottles distributed as samples are also includible in cost.
2. Coke 300 ml in Glass Bottles, which are returnable, hence not added to the cost bottles not returned are
immaterial.
3. Coca-Cola in 1,500 ml plastic bottles, which are not returnable, hence their cost added to the cost.
4. 28% GST and 15% State compensation Cess is leviable on taxable value of supply.

PRACTICAL PROBLEMS RELATING TO VALUATION OF VARIOUS SERVICES

Illustration 7

Reliable service station is authorized for repair service and maintenance of BMW cars. It
collected following charges for services provided and supply of goods.

Rs.
1.. Free servicing of cars during warranty periods, for which 8,50,000
car company reimburse the charges for such service
2. Charges realized from vehicles owners for servicing, etc. 6,75,000
3. Following amounts realized for repairing of cars:
(a) Repair charges Rs. 3,80,000
(b) Parts and spares replaced Rs. 2,85,000 6,65,300
4. Amount charged for denting and painting of cars 2,67,300
5. Engine oil, gear oil and coolant sold to customers 1,12,500

Determine the taxable value of supply of goods/services. Also find out the amount of GST
payable by the service station. GST was not charged separately in the bills by the service
station.

Solution

Computation of Taxable Value of Goods/Services for Reliable Service Stations

Rs.
1. Amount recovered from the manufacturer of cars for service 8,50,000
provided during warranty period
Service charged from owners of vehicles 6,75,000
Amount charged for replacement of parts, etc. (composite supply of 2,85,300
goods while servicing)
Repairing charges 3,80,000
Charges for denting and painting of cars 2,67,300
Engine oil, Gear oil and Coolant sold to customers (Supply of Goods) 1,12,500
Total Amount Charged with GST 25,70,100
 Less: GST included @ 18% (assumed) (-) 3,92,050
Value Taxable Services 21,78,050
Amount of GST Payable 3,92,050
Notes:
1. Service station has not realized GST separately. Hence GST @ 18% is assumed, which is calculated as
follows:
Amount of Goods / Services Charged x GST Rate
100 + GST Rate
= 25,70,100 x 18
118

= 3,92,050 Ans.

2. No separate rate of GST for goods sold under composite supply and rate of oils, etc. has been given,
therefore, a common rate of 18% is also assumed on these items of goods.

Illustration 9

`Sure Success’ is a Coaching Institute imparting commercial training and coaching. The institute
realized following fees in the half yearly period ending on 30 June, 2019:

Rs.
1. Dancing and music training fees 2,45,700
2. Coaching fee for preparation of CA Exams 3,80,000
3. Coaching fee for PMT examinations 10,08,000
4. Other employers hired the services of the institute to train 3,18,000
their employees
5. ICAI hired the services of the coaching institute for 2,23,400
imparting computer training to aspirants of CA, and paid
the institute for fees, etc.
6. Some vocational training programmes are also arranged by
the institute, for which it collected a fee as under: Rs.
(a) Tailoring training 25,000
(b) English speaking course 1,12,500
(c) TV repairing training 1,05,000
(d) Secretarial training 85,000 3,27,500
7. Distant coaching fees charged 1,27,300
The institute incurred the following expenses in the conduct of training and coaching
programmes:
Rs.

1. Salary to trainers and lectures 5,32,000

2. Stationery and Office expenses 36,000
3. Lighting and AC expenses 58,000
4. Rent of the building 4,50,000
5. Cost of study material provided to the aspirants Rs. 1,82,500. The
students paid Rs. 3,80,000 for such study materials. Apart this, Rs.
40,000 also realized for dispatch of materials.

Determine the taxable value of services provided by the institute and GST payable which is
charged separately @ 18% rate applicable.

Computation of Taxable Value of Services

Particulars Amount
(Rs.)
1. Dancing and music training fee (exempt) Nil
2. Coaching fees for preparations of CA exams 3,80,000
3. Coaching fees for PMT exams 10,08,000
4. Payment received from employers for training their employees 3,18,000
5. Computer training to CA aspirants arranged by ICAI 2,23,400
6. Total fees for vocational programmes 3,27,500
7. Study materials and dispatch charges (3,80,000 + 40,000) 4,20,000
8. Distant coaching fees realized 1,27,500
Taxable Value of Services 28,04,400
GST payable @ 18% (9% SGST and 9% CGST) 5,04,792

Notes:
1. PMT, CA, Vocational Training services are taxable services.
2. Dance and music training is related to art and cultural services, which are exempted.
3. Amount charges for study materials along with its dispatch charges are includible is taxable services.
4. Distant coaching is taxable service.
Illustration 10

Alankar Advertisers is an advertising agency, which has charged he following amounts for
services provided to its clients for the quarter ending 30 June, 2019:

1. Collected an amount of Rs.6,72,000 for, cost of procuring spaces for advertisements in the
magazines and newspapers. Agency is allowed 20% commission on such amount.
2. For conceptualizing, designing ad preparing an advertisement, the agency received an
amount of Rs.1,42,500. In this context agency incurred Rs.20,000 on photography and
Rs.12,000 other expenses.
3. Agency prepared some advertisement films for its clients on which an amount f Rs.1,80,000
incurred while the consideration received was Rs.4,28,000 from its clients.
4. The agency acquired some billboards and hoardings at various sites for display of
advertisements. Rent paid was Rs, 2,45,000 and Rs.1,85,000 incurred in painting the
advertisements agency collected Rs.8,45,000 from clients to advertise on these hoardings,
etc.
5. The agency designed and printed letterheads and visiting cards for which it received
Rs.22,500 for designing and Rs.37,500 for printing. Etc.
6. The agency also provides consultancy services relating to advertising for which it received
and an amount of Rs.1,25,000 in all.
7. The agency prepared advertisements for hoardings, posters, newspapers and T.V. for public
display of a charitable function and did not charged any amount for this service, while the
cost incurred as Rs.1,07,000 on such services.
8. The expenses incurred by the agency for running its functions in office place, lights, AC,
salary, computers and telephones, etc. were Rs.35,000.
9. Determine the taxable value of services and also find out the amount of GST payable
assuming applicable rate at 18%.
Solution
Computation of Taxable Value of Services and
GST payable by Alankar Advertisers

Particulars Amount (Rs)

1. Commission for procuring space for advertisement in magazines and
newspaper (6,72,000 x 20%) 1,34,400
2. Fee for preparing advertisement 1,42,500
3. Advertisement film making consideration 4,28,000
4. Collection for an advertisement for clients on hoardings and 8,45,000
billboards
5. Designing and printing of letter heads and vising cards of clients
(22,500 + 37,500) 60,000
6. Advertising consultancy services 1,25,000
7. Preparation of advertisement for charitable function without Nil
consideration
Value of Taxable Services 17,34,900
Calculation of GST payable @ 18% (9% CGST and 9% SGST)
17,34,900 x 18% 3,12,282

Notes:
1. No consideration received for charitable function related services. Hence, no GST is chargeable.
2. Amount collected for getting space in print media is a transfer value given to newspapers and magazines.
Service of agency is procuring the space. Hence, the commission charged from clients is the consideration
for services.
3. No expenses relating o services provided is deductible from the amount received for advertisement
survey.
4. No expenditure of advertising agency is running the function of providing services is deducted. But, the
gross amount charged is taxable.

Illustration 11

Bharat Studio is a photographer, for the quarter ending 30 June, 2019, has furnished the
following information regarding of photography services in its customers:

1. Photographs taken at a big gathering at colleges and annual functions for which are
amount of Rs.2,85,000. In all has been charged.
The studio has incurred the total expense of Rs.70,000 as follows:
Developing cost 42,000
 Photography Films used 28,000
2. Amounts collected for photographs shot in the studio Rs.4,15,000.
3. Photography outside the studio, such as marriages and other functions. For this
services, Rs.3,72,000 has been charged.
4. Photos of the functions, etc. were sold in albums for which an amount of Rs.58,000
realized.
5. Videography performed at various occasions for which an amount of Rs.2,72,000 in
all realized.
The studio incurred following expenses in the running of its activities:
(i) Photographers salary ad allowances Rs.3,15,000
(ii) Lighting, AC ad other expenses Rs.72,000
(iii) Conveyance charges for attending functions and sites Rs.85,000

Compute the value of taxable services provided by the studio. Studio has not charged GST
separately under the bills.

Solution
Computation of Value of Taxable Services for the quarter
Ending 30 June, 2019 of Bharat Studio
Particulars Amount (Rs)
1. Photography at functions and institutions 2,85,000
2. Photography at studio 4,15,000
3. Photography outside the studio 3,72,000
4. Photos sold with albums (composite supply) 58,000
5. Videography performance 2,72,000
Total Value of Services 14,02,000
Less: GST included : 14,02,000 x 18/118 (-)2,13,865
Taxable Value of Services 11,88,135
Now, Charge GST on Taxable Value 11,88,135 x 18%
(9% CGST + 9% SGST) 2,13,865
Total Value Realized 14,02,000
Notes:
1. GST has not been charged separately, though it is mandatory. Now taxable value as been arrived by
inverse progression method as shown above.
2. Photos in albums are composite supply and taxable.
3. No deduction allowed for expenses incurred by the service provider. Hence gross the realization is
taxable.
Illustration 12

C.A. Amit Bansal is a professional Chartered Accountant. For the quarter ending 30 June, 2019,
he has presented following particulars of his professional receipts:

1. Statutory Audit fees received after TDS (Gross 2,35,000 – 35,000 TDS).
2. Tax consultancy fees 3,65,000
3. Preparation of accounts and ledgers of trading concerns from whom an amount of
Rs.2,42,000 charged.
4. Remuneration for auditing services provided to trading/business firms Rs.2,56,000.
5. Representations under income tax appeals on behalf of clients Rs. 3,56,000.
6. Internal Auditor fees from an Indian Co. Rs. 2,58,000
7. Visiting Faculty services performed at a professional coaching institute, from there
received an honorarium Rs.2,56,000.
He also charged TD and DA for outstation auditing journeys from clients totaling
Rs.2,32,000 in all.
CA Amit Bansal, has incurred an amount of Rs.4,50,000 during the period for smooth
running of his office.
Determine the taxable value of services and compute the amount of GST payable by
him.
All receipts are exclusive of GST which is applicable @18%.

Solution
Computation of Taxable Value of Services for the quarter
Ending 30 June, 2019 of CA Amit Bansal
Particulars Amount (Rs)
1. Statutory Audit fee 2,35,000
2. Tax Consultancy fees 3,85,000
3. Preparation of Accounts and ledgers 2,42,000
4. Auditing services to trading firms 2,56,000
5. Income Tax appeal representation 3,58,000
6. Internal Auditing Fees 2,58,000
7. Visiting Faculty services for coaching 2,56,000
8. Realization of TA and DA from clients 2,32,000
Value of Taxable Services 22,22,000
Notes:
1. Preparation and certification of Accounts and Ledgers is taxable service.
2. TDS is added to the income o make it gross
3. No deduction is allowed for office expenses
4. Income tax appeal representation fee is taxable
5. TA and DA collected from clients for outstation journeys is taxable income

Computation of GST Payable

Rs.
Value of Taxable services 22,22,000

GST @ 18% (9% CGST + 9% SGST) (22,22,000 x 18%) 3,99,960

Illustration 13

Mrs. Archana Gulati a fashion designer of apparels and clothing accessories, has received
the following amounts for the quarter ending 30 June, 2019:

Rs.
1. Materials Consultancy charges 28,200
2. Sketching and preparation of patterns 1,42,700
3. Design conceptualization charges 2,72,600
4. Final fabrics purchase amount 1,18,200
5. Preparation of garment as per need of the clients related
fees 65,200
6. Accessory attached to final designer garments 72,300

Determine the taxable value of the services provided by Mrs. Archana Gulati for which 18%
G.S.T. also collected separately.

Solution

Computation of Taxable Value of Fashion Designer Mrs. Archana Gulati for the quarter
ending on 30 June, 2019
Rs.
1. Materials Consultancy charges 28,200
2. Sketching and preparation of patterns 1,42,700
3. Design conceptualization charges 2,72,600
4. Purchase of final fabrics 1,82,200
5. Preparation of garment as per need of the clients related
charges 65,200
6. Accessories attached to finally designed garments 72,300
Value of Taxable Services 7,63,200
Add: 18% GST (9% CGST + 9% SGST) = (7,63,200 x 18%) 1,37,376
 Final Amount of Service 9,00,576

Illustration 14

Oberoi Hotel has resented following information regarding ice f its hotel for the quarter ending
30 Jue, 2019:

1. Gust house let-out o rent @ Rs.700 per day for 60 days (Declared ret Rs.900 per day per
room).
2. Marriage Hall (Declared rent Rs.1,400 per day) but let-out Rs.50% discount @ Rs.700 per
day for 70 days.
3. Rooms let-out declared ret per day Rs.1,400 but let-out at 25% discount for 80 days @
1,050 per day.

If above figures are exclusive of GST, calculate taxable value of services and GST payable, if rate
is 12%.

Solution
Computation of Value of Taxable Services
Particulars Amount Rs
1. Guest House let out (Not Taxable since declared tariff is less than Nil
Rs.1,000)
2. Marriage Hall given on rent (Taxable since declare tariff is more 49,000
than Rs.1,000 Gross Amount Charged (700 x 70 Days)
3. Hotel Rooms let out (Taxable, since declared tariff is more than 84,000
Rs.1,000 per day (1050 x 60 Days)
Value of Taxable Services 1,33,000
GST (6% CGST + 6% SGST) @ 12% payable on such value 15,960
Total Amount of Invoice 1,48,960
Note: In case of hotel room or marriage garden if tariff value per day per room exceeds Rs.1,000 per day, actual
value charged is taxable.

Illustration 15

A registered interior designer has charged Rs.8,75,000 from its clients for rendering
professional services. The details are as following:
 1. Labour supplied facility and consultancy provided Rs.4,25,000.
2. Furniture supplied to customers/client Rs.3,50,000
3. Value of other materials used in rendering the services to the client as per need
Rs.1,00,000.
4. Compute the taxable value of services ad GST payable there upon @ 18%.

Solution
Computation of Taxable Value of Services
Particulars Rs.
1 Labour facility ad consultancy provided 4,25,000
2. Furniture supplied to the clients 3,50,000
3. Value of other material use in decoration as per client’s need 1,00,000
Value of Taxable Goods/Services 8,75,000
GST @ 18% (9% CGST + 9% SGST) (Rs.8,75,000 x 18) 1,57,500

Note:
1. Supply of furniture is supply of goods, while interior decoration is service. Since under GST both are
taxable, therefore, value of taxable supply of gods/services shall be determined.
2. No deduction is allowed for material used while rendering services.