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SUBSIDY PROVIDED BY GOVERNMENT

Priya Kashyap (Student) (7053 Points)

26 February 2019

how shall tax be paid in case a supplier transfer 1000 RS worth goods to customer and 300 RS subsidy provided by government?
what shall be tax if at 18%?
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12 Replies

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 26 February 2019

Reverse sale by RS. 300/- (reduce the output tax liability in proportion to subsidy)
Or
Raise the tax Invoice as below
goods value 1000/-
less subsidy. 300/-
Taxable value 700/-
GST. @ 5% 35/-
Total. 735/-

Note : Kindly refer section 15 CGST Act

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Priya Kashyap (Student) (7053 Points)
Replied 26 February 2019

but sir what if 700 paid by customer to supplier, then 700 directly attract GST at 5%!
am I right?

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 26 February 2019

Yes correct ,... thats what I have replied , only RS . 700/- is recoverable from customer

Priya Kashyap (Student) (7053 Points)
Replied 26 February 2019

now comes the real doubt sir,
in case an organisation remits supplier some amount as subsidy and supplier sells goods to customer, how shall it be taxed?

for say: supplier sold 1500rs goods to customer where 500 as subsidy remitted by an organisation to supplier, how shall it be taxed?

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 26 February 2019

Kindly explain Organisation .... if you mean Govt Concern ???

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Priya Kashyap (Student) (7053 Points)
Replied 26 February 2019

non goverment organisation ...

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 26 February 2019

Ok fine

If it's Non Govt Organisation The Bill will be done in following

Goods value 1500/-
GST @ 5%. 75/-
Total 1575/-
Less subsidy. 500/-
Net payable. 1075/-

So net recoverable is 1075/-
note: calculation is done excluding Tax

@ priya
Try to understand both example , if Govt is giving subsidy , will be not include in value of supply the GST will levy on value after reducing the subsidy. & in case of Non govt subsidy Vice Versa

Priya Kashyap (Student) (7053 Points)
Replied 26 February 2019

means the amount charged from customer + subsidy from non government will be taxed?

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 26 February 2019

Yes ... correct

kindly refer section 15 CGST & valuation Rules

Priya Kashyap (Student) (7053 Points)
Replied 26 February 2019

sir, who shall be liable to pay GST on 500rs of SUbsidy NON GOVT OR SUPPLIER AND HOW?

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 27 February 2019

Plz when subsidy is from Non Govt the GST is applicable on Value of Supply :

Example 1.
In Case Non Govt subsidy is 500

lGoods Value : 1500/-
GST @ 5% :. 75/-
Total. 1575/-
Less : Subsidy :. 500/-
Net recoverable :. 1075/-

***GST is charged on full value of supply (GST being charge on Full value)

Example 2:
In case of Govt Subsidy 500/-

Value of Goods :. 1500/-
Less : subsidy :. 500/-

Taxable value. :. 1000/-
GST @ 5% :. 50/-
Total value. 1050/-

**GST is charged on value after reducing subsidy.

Hope above will clear your doubts