17 Questions
What type of service is provided when businesses extend deposits, loans, or advances?
Service by way of extending deposits, loans or advances
In the context of GST, what happens if the income from services, such as extending deposits, loans, or advances, causes the value of services supplied to exceed a certain threshold?
Business may become ineligible for the composition scheme for goods and have to opt out.
Under which provision is interest income excluded for determining the value of turnover in a State or Union territory?
Second proviso to section 10(1)
What is the criterion for businesses to remain eligible for the composition scheme for goods?
The value of services supplied should not exceed 10% of the turnover in the preceding FY in a State/Union territory or ₹5 lakh, whichever is higher.
What type of businesses may face hardship due to becoming ineligible for the composition scheme for goods?
Small businesses
In what scenario are services by way of extending deposits, loans, or advances exempt from GST?
When the consideration is represented by way of interest or discount
What is the maximum value of services that a person opting to pay tax under clause (a), (b), or (c) can supply in a State or Union territory?
Ten percent of turnover in the preceding financial year or five lakh rupees, whichever is higher
Under what circumstance is the value of exempt supply of services involving extending deposits, loans, or advances not considered in determining the turnover in a State or Union territory?
When the consideration is represented by way of interest or discount
What is the rate of tax prescribed for a manufacturer under the composition scheme for goods?
Half percent of the turnover in State/UT
What type of services are excluded from the value calculation for determining the maximum amount of services that can be supplied in a State or Union territory?
Services referred to in clause (b) of paragraph 6 of Schedule II
Why is the consideration represented by way of interest or discount not taken into account for determining the turnover in a State or Union territory?
To exclude the value of exempt supply of services involving extending deposits, loans, or advances
What is included in the aggregate turnover for determining eligibility to pay tax under this section?
Value of supplies made by the person from 1st April of a financial year up to the date of liability for registration, excluding exempt supply of services related to extending deposits, loans, or advances represented by interest or discount.
What should be excluded from the turnover in State or Union territory for tax calculation purposes?
Supplies made from 1st April to the date of liability for registration, and exempt supply of services related to extending deposits, loans, or advances represented by interest or discount.
What is the purpose of the composition levy?
To provide an alternative tax levy method for small taxpayers with turnover up to a prescribed limit.
Why was the composition scheme introduced?
To bring simplicity and reduce compliance costs for small taxpayers.
What type of taxpayers is the composition scheme designed for?
Small taxpayers with turnover up to a prescribed limit.
What value of services should be excluded when determining tax payable under this section?
Exempt supply of services related to extending deposits, loans, or advances represented by interest or discount.
Test your knowledge on the exclusion of interest income when determining the value of turnover in a State or Union territory as per the second proviso to section 10(1). Explore the concept of businesses investing in deposits, loans, or advances leading to service supply, and the implications on service value.
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