Computation of aggregate turnover for registration threshold

Facts: M/s ABC Traders has the following supplies in FY 2024-25: (i) intra-State taxable sales of goods Rs. 30,00,000; (ii) exports Rs. 8,00,000; (iii) inter-State sale Rs. 4,00,000; (iv) exempt supplies (educational materials) Rs. 6,00,000; (v) interest earned on fixed deposits Rs. 1,50,000; (vi) inward supply liable to RCM Rs. 5,00,000. ABC has only one State of operation.

Step 1: Include all taxable supplies (Rs. 30 lakh) excluding GST itself.

Step 2: Include exports Rs. 8 lakh and inter-State Rs. 4 lakh.

Step 3: Include exempt supplies Rs. 6 lakh.

Step 4: EXCLUDE: interest on FDs (not a supply — Schedule III item 5) and inward RCM (s. 2(6) excludes inward RCM).

Step 5: Aggregate turnover = 30 + 8 + 4 + 6 = Rs. 48 lakh.

Result: Aggregate turnover Rs. 48,00,000 — exceeds Rs. 40 lakh (assuming goods-only supplier per Notification 10/2019-CT). ABC is liable to register under s. 22(1) within 30 days of crossing.

Hotel room with complimentary breakfast

Facts: A 4-star hotel charges Rs. 8,000 per night for a non-AC room, with complimentary breakfast included in the price. Room tariff is at 12% GST; restaurant service (when separately supplied) is at 5% GST.

Step 1: Identify whether breakfast and room are naturally bundled — yes, in the ordinary course of hotel business; the typical guest expects breakfast included.

Step 2: Identify principal supply — accommodation is dominant (room rate is the headline charge).

Step 3: Apply s. 8(a) — composite supply taxed at principal-supply rate.

Result: Whole Rs. 8,000 chargeable at 12% (room rate). If a guest separately orders restaurant service (Rs. 1,500), that supply is independently taxed at 5%.

Diwali gift hamper (sweets, chocolates, canned juice, dry fruits) for Rs. 2,000

Facts: A retailer sells a single-priced gift hamper combining items that, if sold individually, would attract different rates — sweets 5%, chocolates 18%, juices 12%, dry fruits 5%.

Step 1: Items can be supplied independently — no natural bundling.

Step 2: Single price → s. 2(74) mixed supply.

Step 3: Apply s. 8(b) — taxed at the highest-rate component (chocolates at 18%).

Result: Whole Rs. 2,000 chargeable at 18% (chocolates rate).

Membership fee charged by a registered club to its members

Facts: XYZ Club, an incorporated society in Delhi, charges its members an annual subscription of Rs. 30,000 each. Pre-2021, the doctrine of mutuality (Calcutta Club, SC) was a defence. Post-FA 2021 (effective from 01.07.2017 by retrospective insertion of s. 7(1)(aa), enforced from 01.01.2022), is GST attracted?

Step 1: S. 7(1)(aa) deems the club and its members as two separate persons.

Step 2: The supply of facilities / benefits for cash consideration is thereby a supply under s. 7.

Step 3: The mutuality defence (Calcutta Club) no longer survives for GST periods from 01.07.2017 onwards.

Result: Annual subscription Rs. 30,000 attracts GST at the applicable rate (18% for club services). XYZ Club must register if aggregate turnover crosses threshold and charge / remit GST.

Legal service from an advocate to a business entity

M/s PQR Ltd. engages an advocate for litigation; advocate's fee Rs. 1,00,000. Under Notification 13/2017-CT(R), services by an individual advocate to a business entity are notified for RCM under s. 9(3). PQR Ltd. (recipient, registered) is liable to pay GST at 18% under reverse charge — Rs. 18,000 — by debiting cash ledger. The advocate does not charge GST in his bill. PQR Ltd. issues a self-invoice under s. 31(3)(f) and a payment voucher under s. 31(3)(g). PQR Ltd. claims ITC on the RCM-paid GST (subject to s. 17 blocked credits — legal services for business are eligible).

Manufacturer opting for composition

Facts: M/s LMN Manufacturers had aggregate turnover Rs. 1,20,00,000 in FY 2023-24. They wish to opt for composition under s. 10(1)(a) for FY 2024-25. They supply goods only. No inter-State supply.

Step 1: Verify threshold — Rs. 1.5 crore (Notification 14/2019-CT) for manufacturers in normal States; Rs. 1.2 crore is within threshold.

Step 2: Verify other eligibility — no inter-State outward supply (satisfied); no notified non-leviable goods (verify); no supplies through TCS-ECO (verify); not CTP / NRTP.

Step 3: Rate under s. 10(1)(a) = 1% combined (0.5% CGST + 0.5% SGST) on turnover-in-State.

Step 4: File Form GST CMP-02 to opt in before commencement of FY 2024-25.

Result: If FY 2024-25 turnover-in-State is Rs. 1,40,00,000, composition tax = 1% × 1,40,00,000 = Rs. 1,40,000 (CGST + SGST equally split). LMN cannot collect tax from recipients (s. 10(4)) nor avail ITC. If turnover crosses Rs. 1.5 crore during FY, option lapses from the date of crossing (s. 10(3)).

Sequence — Advance, Invoice, Delivery

Facts: M/s ABC supplies machinery. On 5 May 2025, it receives an advance of Rs. 50,000 from customer XYZ against an order worth Rs. 5,00,000. Invoice is raised on 20 May 2025. Goods are despatched on 25 May 2025. Balance Rs. 4,50,000 is received on 10 June 2025.

Step 1: S. 12(2) — earlier of (a) invoice date / last permissible date and (b) receipt of payment.

Step 2: For Rs. 50,000 advance — payment receipt 5 May 2025; invoice on 20 May 2025. Time of supply for Rs. 50,000 portion = 5 May 2025 (advance precedes invoice).

Step 3: For Rs. 4,50,000 balance — invoice 20 May 2025; balance payment 10 June 2025. Time of supply for Rs. 4,50,000 = 20 May 2025 (invoice precedes payment).

Step 4: Note: Pre-Notification 66/2017-CT (15.11.2017), advances on goods triggered tax. Post that Notification, for non-composition taxpayers, advances on goods DO NOT trigger time of supply — tax payable only on invoice or removal. This is a critical practical exception.

Result: Under the Notification 66/2017-CT exception, the entire Rs. 5,00,000 attracts GST at the time of invoice — 20 May 2025. Practitioners must track this exception for non-composition taxpayers supplying goods.

Service rate changes from 18% to 12% effective 1 October 2024

Facts: Hotel ABC: (i) Provides service on 25 Sept 2024 (before rate change); (ii) Issues invoice on 5 Oct 2024 (after); (iii) Receives payment on 10 Oct 2024 (after). Which rate applies?

Step 1: Identify which limb of s. 14 — supply BEFORE the rate change → s. 14(a).

Step 2: Within s. 14(a) — invoice AFTER, payment AFTER → sub-clause (i).

Step 3: Time of supply = earlier of payment date and invoice date = 5 Oct 2024 (invoice earlier).

Step 4: Rate applicable = NEW rate (12%) — because time of supply is after the rate change.

Result: GST @ 12% applies. Practitioners may consider whether the rate-change brought a benefit and should renegotiate the price post-rate-change to share the benefit with the customer.

Goods transfer between related parties

Facts: M/s ParentCo (Mumbai) transfers raw materials worth Rs. 100 per unit (open market value) to its wholly-owned subsidiary SubCo (Bangalore) for inter-State supply. Internal transfer price recorded at Rs. 80 per unit. SubCo will further supply the goods to unrelated customers at Rs. 120 per unit. Is ParentCo's transfer value Rs. 80 or Rs. 100?

Step 1: ParentCo and SubCo are related persons under s. 15 Explanation (one controls the other).

Step 2: Rule 28 hierarchy applies: (i) open market value (OMV); (ii) value of like kind; (iii) 90% of price to unrelated recipient (if goods for further supply); (iv) Rule 30 cost-plus 10%; (v) Rule 31 residual.

Step 3: OMV is Rs. 100 — directly applicable.

Step 4: Alternative: 90% of Rs. 120 (price to unrelated) = Rs. 108. OMV (Rs. 100) is preferable in this case.

Step 5: Important — second proviso to Rule 28 (inserted by Notification 26/2018-CT): if recipient is eligible for full ITC, ANY value declared in the invoice is acceptable.

Result: If SubCo is eligible for full ITC on this inward supply, ParentCo can invoice at Rs. 80 (or any value) and it will be accepted under the second proviso to Rule 28. If SubCo's ITC is restricted (e.g., used for exempt supplies), then OMV Rs. 100 or 90%-rule Rs. 108 applies.

Year-end volume rebate to dealer

Facts: M/s SupplierCo supplies goods to DealerCo through FY 2024-25 for Rs. 10 crore. Their dealership agreement of 1 April 2024 provides for a volume rebate of 2% on annual purchases above Rs. 8 crore. SupplierCo issues a credit note on 31 March 2025 for Rs. 20 lakh (2% of Rs. 10 crore). Is this discount excludible from value?

Step 1: Verify three conditions of s. 15(3)(b): (i) agreement at or before time of supply — YES (1 April 2024 dealership agreement specifies the rebate); (ii) discount specifically linked to relevant invoices — must list the invoices to which the credit note relates; (iii) recipient's ITC reversal of attributable amount.

Step 2: If all three conditions satisfied — discount excluded from taxable value; SupplierCo can reduce output liability via the credit note declared in GSTR-1 by 30 November 2025 (s. 34(2)).

Step 3: If condition (i) fails (e.g., no contemporaneous agreement) — discount remains in taxable value; credit note is mere commercial document, no GST adjustment.

Result: If three conditions met: SupplierCo's output tax reduces by GST on Rs. 20 lakh. DealerCo must reverse the corresponding ITC. If conditions fail: no GST adjustment; the Rs. 20 lakh effectively becomes a discount given out of margin without tax relief.

Recipient ITC reversal where supplier files GSTR-1 but not GSTR-3B

Facts: M/s RecipientCo claims ITC of Rs. 2,00,000 on supplies from M/s SupplierCo for May 2024 — invoice reflected in GSTR-2B for May 2024. SupplierCo files GSTR-1 timely but defaults on GSTR-3B (does not discharge output tax). The cut-off date for SupplierCo's GSTR-3B for May 2024 is 30 September 2025 (i.e., FY 2024-25 + 30 Sept of next FY). What is RecipientCo's position?

Step 1: Rule 37A trigger: SupplierCo's GSTR-3B for May 2024 not filed by 30 September 2025.

Step 2: RecipientCo must reverse the Rs. 2,00,000 ITC by 30 November 2025 (per Rule 37A).

Step 3: Reversal mechanism: add Rs. 2,00,000 to output tax liability in GSTR-3B of October or November 2025; pay through cash ledger.

Step 4: Re-availment: if SupplierCo subsequently files GSTR-3B and discharges output tax, RecipientCo may re-avail under proviso to s. 41(2).

Result: RecipientCo must monitor supplier compliance quarterly. Set up automated tracking of major suppliers' GSTR-3B filing status. Reversal as a precaution is better than dispute.

30 November deadline computation

M/s XYZ receives an invoice dated 15 March 2025 from a supplier. The invoice is in respect of FY 2024-25. Outer time for ITC claim — earlier of (i) 30 November 2025 (30 November of next FY) OR (ii) date of furnishing annual return for FY 2024-25 (due 31 December 2025). The relevant date is 30 November 2025. XYZ MUST claim the ITC in any GSTR-3B from March 2025 to October 2025 (filed by 30 November 2025). Beyond this date, the ITC is permanently lost. Pre-FA 2022, the limit was 'September of next FY' — FA 2022 effectively extended by 2 months.

Supplier paid after 180 days

Facts: M/s BuyerCo receives invoice dated 1 April 2025 for Rs. 10,00,000 (GST Rs. 1,80,000). BuyerCo claims ITC of Rs. 1,80,000 in GSTR-3B for April 2025. Payment to supplier not made within 180 days (i.e., by 28 September 2025). What happens?

Step 1: Second proviso to s. 16(2) — failure to pay supplier within 180 days requires reversal of ITC.

Step 2: BuyerCo must add Rs. 1,80,000 + applicable interest (Rule 37) to output tax in GSTR-3B for October 2025.

Step 3: On subsequent payment to supplier (whenever made) — re-avail under third proviso to s. 16(2).

Result: Rule 37 quantifies the reversal. The 180-day rule applies only to non-RCM supplies. RCM-based ITC (where the recipient itself pays the GST) is not subject to this rule because the supplier-payment-trigger does not exist.

Bank with taxable and exempt supplies

Facts: BankCo earns interest income (exempt) of Rs. 100 crore and fee-based income (taxable) of Rs. 20 crore in a month. Common input services attract GST of Rs. 5 crore. Apportion the ITC.

Step 1: Total turnover = 100 + 20 = Rs. 120 crore.

Step 2: Exempt turnover = Rs. 100 crore (interest income — exempt under Notification 12/2017-CT(R)).

Step 3: Rule 42 ratio: exempt / total = 100/120 = 83.33%.

Step 4: ITC attributable to exempt supplies = 83.33% × Rs. 5 crore = Rs. 4.17 crore. This must be reversed.

Step 5: ITC available for utilisation = Rs. 5 crore - Rs. 4.17 crore = Rs. 0.83 crore.

Step 6: Alternative for banks: s. 17(4) option — fixed 50% lapse on all ITC. Compare and elect annually.

Result: Under Rule 42 method: only Rs. 0.83 crore ITC. Under s. 17(4) option: Rs. 2.5 crore (50% of Rs. 5 crore) ITC. BankCo would elect the 50% option here (better). The option must be exercised at the start of FY and is binding for the year.

Mall-owner constructing commercial complex for letting out

M/s MallCo constructs a mall at total cost Rs. 100 crore (incl. GST of Rs. 18 crore on construction services). The mall is leased to tenants — rent attracts GST. Pre-Safari Retreats SC October 2024 decision: ITC blocked under s. 17(5)(d). Post-Safari Retreats: ITC may be available IF the mall qualifies as 'plant and machinery' under the functional test. Post-FA 2024 amendment to s. 17(5)(d) [retrospective]: scope narrowed to ensure ITC blocked even on functional test. Practitioners should examine: (i) whether their construction period predates FA 2024 amendment; (ii) whether the property genuinely meets functional plant-and-machinery test; (iii) whether s. 11A regularisation notification is contemplated for pre-amendment periods. The position is unsettled and pending litigation.

PAN-based aggregate turnover spanning multiple States

Facts: M/s ProprietorCo has shops in Maharashtra (Rs. 25 lakh taxable supplies), Karnataka (Rs. 12 lakh) and Kerala (Rs. 8 lakh) in FY 2024-25. All shops under same PAN. Determine registration liability.

Step 1: Aggregate turnover (PAN-based) = 25 + 12 + 8 = Rs. 45 lakh — exceeds Rs. 20 lakh threshold for normal States.

Step 2: ProprietorCo is liable to register in EACH State where taxable supplies are made.

Step 3: Karnataka and Kerala are normal-threshold States — Rs. 20 lakh threshold applies; turnover in Karnataka (Rs. 12 lakh) and Kerala (Rs. 8 lakh) is below State-wise turnover but aggregate triggers registration.

Step 4: Special category States (e.g., Manipur) have Rs. 10 lakh threshold — would apply if any operation was there.

Result: ProprietorCo must register in Maharashtra, Karnataka and Kerala separately (each registration is a 'distinct person' under s. 25(4)). Apply within 30 days of crossing Rs. 20 lakh aggregate.

GSTR-3B sequencing for backlog

M/s LateFilerCo has not filed GSTR-3B for January 2025 and February 2025. They want to file March 2025 GSTR-3B by 20 April 2025. Under s. 39(10) post-FA 2022, the March GSTR-3B is BLOCKED until the January and February GSTR-3Bs (and corresponding GSTR-1s) are filed. LateFilerCo must: (i) file GSTR-1 for January, February and March (in sequence per s. 37(4)); (ii) file GSTR-3B for January, then February, then March, each with applicable interest under s. 50 and late fee under s. 47. The sequencing rule is a strict compliance enforcement tool.

GSTR-9 filed 100 days late

Facts: M/s SmallTaxpayer has State turnover of Rs. 3 crore for FY 2023-24. GSTR-9 (due 31 December 2024) filed on 10 April 2025 (100 days late). Compute late fee.

Step 1: S. 47(2) — Rs. 100 per day each under CGST + SGST = Rs. 200 per day combined.

Step 2: Statutory cap — 0.25% of State turnover under CGST + 0.25% under SGST = 0.5% combined of State turnover.

Step 3: 0.5% of Rs. 3 crore = Rs. 1,50,000 cap.

Step 4: Daily fee 100 days × Rs. 200 = Rs. 20,000 — well within cap.

Step 5: Notification 7/2023-CT for FY 2022-23 onwards: for AATO ≤ Rs. 5 crore, late fee restricted to Rs. 50 per day combined (Rs. 25 CGST + Rs. 25 SGST), max 0.04% of State turnover. Check whether this concession extends to the year in question.

Result: Pre-concession: Rs. 20,000. Post-concession (if applicable): 100 × Rs. 50 = Rs. 5,000, subject to 0.04% × 3 crore = Rs. 12,000 cap. Practitioners should track the latest amnesty / concession notifications.

Three-tax utilisation

Facts: M/s MultiTaxCo has output liabilities for May 2025: IGST Rs. 10 lakh, CGST Rs. 8 lakh, SGST Rs. 8 lakh. ITC available: IGST Rs. 15 lakh, CGST Rs. 5 lakh, SGST Rs. 6 lakh. Compute optimal utilisation.

Step 1: Step 1 — s. 49A: IGST credit must be fully utilised first. Allocate IGST credit Rs. 15 lakh.

Step 2: Step 2 — IGST credit goes first to IGST output (Rs. 10 lakh). Remaining IGST credit = Rs. 5 lakh.

Step 3: Step 3 — IGST credit residue (Rs. 5 lakh) can be allocated to CGST OR SGST in any order at taxpayer's choice (Rule 88A). Suppose allocated to CGST: Rs. 5 lakh against CGST output of Rs. 8 lakh.

Step 4: Step 4 — Now CGST and SGST credit can be used. CGST credit Rs. 5 lakh against remaining CGST output Rs. 3 lakh — utilise Rs. 3 lakh, residue Rs. 2 lakh of CGST credit.

Step 5: Step 5 — CGST credit residue Rs. 2 lakh cannot be used for SGST (s. 49(5)(e) bar). It carries forward.

Step 6: Step 6 — SGST credit Rs. 6 lakh against SGST output Rs. 8 lakh — utilise Rs. 6 lakh; residue cash payment Rs. 2 lakh in SGST.

Result: Cash payment: Rs. 2 lakh SGST. Credit balance carrying forward: Rs. 2 lakh CGST. If MultiTaxCo allocates IGST residue to SGST instead (Step 3 alternative), cash payment would shift to CGST — same total impact but State-Centre cash split differs. For PAN-based optimisation, MultiTaxCo should plan SGST output by State to maximise utilisation.

Interest on late GSTR-3B filing

Facts: M/s LateCo's GSTR-3B for April 2025 (due 20 May 2025) is filed on 10 July 2025. Output liability is Rs. 5,00,000. ITC available and utilised = Rs. 3,00,000. Cash paid = Rs. 2,00,000. Delay = 51 days (from 21 May to 10 July). Compute interest.

Step 1: S. 50(1) proviso (post-FA 2021): interest only on the cash-paid portion of tax.

Step 2: Cash component = Rs. 2,00,000.

Step 3: Interest @ 18% per annum × 51/365 = 18% × 51/365 × Rs. 2,00,000 = Rs. 5,030.

Result: Interest payable Rs. 5,030. NOTE — if the return is filed AFTER commencement of s. 73 / 74 proceedings, the cash-only proviso does not apply, and interest is on gross Rs. 5,00,000.

Wrongful availment with no utilisation vs with utilisation

Facts: M/s ITCco wrongly avails ITC of Rs. 1,00,000 in May 2025 GSTR-3B (e.g., on a blocked credit under s. 17(5)(b) — health insurance). Two scenarios: (a) the credit ledger had sufficient balance and the wrongful availment was reversed in June 2025 GSTR-3B before any utilisation; (b) the credit was utilised in June 2025 to discharge output tax, and reversal is done in August 2025.

Step 1: Scenario (a) — Rule 88B(3): wrongly availed credit NOT utilised attracts NO interest. Simple reversal in next return.

Step 2: Scenario (b) — wrongly availed AND utilised → s. 50(3) applies; interest @ 24% per annum from date of utilisation to date of reversal.

Step 3: If utilised on 20 June 2025 and reversed on 20 August 2025 — period = 61 days.

Step 4: Interest = 24% × 61/365 × Rs. 1,00,000 = Rs. 4,011.

Result: Scenario (a): no interest. Scenario (b): Rs. 4,011 interest plus reversal of Rs. 1,00,000 with applicable penalty under s. 74 (where applicable for fraud cases) or s. 73 (otherwise). The carve-out in Rule 88B(3) for availed-not-utilised is a substantial relief.

Government department procuring works contract

Facts: Public Works Department (deductor) awards a road-construction works contract to M/s ContractorCo (deductee, registered in same State as PWD). Contract value Rs. 1,00,00,000 (excluding GST). Payment of Rs. 25,00,000 to be released on first milestone.

Step 1: Check threshold — single contract Rs. 1 crore exceeds Rs. 2.5 lakh — TDS applies.

Step 2: TDS rate — 2% combined (1% CGST + 1% SGST) on the payment value (excluding GST).

Step 3: Payment for milestone = Rs. 25 lakh. TDS = 2% × 25 lakh = Rs. 50,000 (Rs. 25,000 CGST + Rs. 25,000 SGST).

Step 4: PWD deducts Rs. 50,000 and remits Rs. 24,50,000 to ContractorCo.

Step 5: PWD files GSTR-7 by 10th of next month, declaring TDS.

Step 6: TDS auto-reflects in ContractorCo's cash ledger; can be used to pay GST on the milestone supply.

Result: Contractor's cash ledger gets Rs. 50,000 credit. The TDS is essentially an advance-payment of GST. ContractorCo's effective cash outflow is reduced when paying GST on the supply.

Online marketplace TCS

M/s SellerCo sells through Flipkart in October 2024 — total sales Rs. 20,00,000 (taxable supplies, excluding GST); returns Rs. 2,00,000. Net taxable supply = Rs. 18,00,000. Flipkart (TCS collector) computes TCS at 0.5% combined (post-Notification 15/2024-CT, effective 10.07.2024): 0.25% CGST + 0.25% SGST. TCS = 0.5% × Rs. 18 lakh = Rs. 9,000 (Rs. 4,500 CGST + Rs. 4,500 SGST). Flipkart withholds Rs. 9,000 from SellerCo's payout, files GSTR-8 by 10 November 2024, and TCS auto-reflects in SellerCo's cash ledger. SellerCo can use this credit to pay output GST on the sales.