Personal practicle query
This query is : Resolved
18 April 2019
Purchase cost 10/- per unit
Labour cost 5/- per unit
Profit margin 3/- per unit
Sale price 18/- per unit
So GST on 18/-@18% =3.24/- per unit
On Purchase 10/-×18%=1.8/- per unit
Net payable-3.24-1.80=1.44
Where as profit is of only ₹3 per unit.
So on 3/- profit 1.44tax is extremely high.
And than extra liability of income tax also stand.
Therefore I request you to advise that is their any reverse charge mechanism to offset the gst liability on labour cost of ₹5.
However, if a trader was there and he purchased any commodity of Rs15 and sell it @ Rs 18 he has to pay gst on value addition of Rs3 only where as this mfg.unit of which I have mentioned above has to pay gst on Rs 8 from his pocket (18-10) which includes labour cost itself of Rs5.
In both the cases entity earning Rs 3 each but one is paying on value addition of Rs 3 and other on Rs 8 so is there any thing like reverse charge mechanism on labour cost?
Labour cost 5/- per unit
Profit margin 3/- per unit
Sale price 18/- per unit
So GST on 18/-@18% =3.24/- per unit
On Purchase 10/-×18%=1.8/- per unit
Net payable-3.24-1.80=1.44
Where as profit is of only ₹3 per unit.
So on 3/- profit 1.44tax is extremely high.
And than extra liability of income tax also stand.
Therefore I request you to advise that is their any reverse charge mechanism to offset the gst liability on labour cost of ₹5.
However, if a trader was there and he purchased any commodity of Rs15 and sell it @ Rs 18 he has to pay gst on value addition of Rs3 only where as this mfg.unit of which I have mentioned above has to pay gst on Rs 8 from his pocket (18-10) which includes labour cost itself of Rs5.
In both the cases entity earning Rs 3 each but one is paying on value addition of Rs 3 and other on Rs 8 so is there any thing like reverse charge mechanism on labour cost?
19 April 2019
But that is quite obvious. He can think of getting it subcontracted at 15 from some entity of his choice.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Under construction property in ITR
- Gift of mutual fund units to daughter
- Not able to file ITR
- Upload Level ValidationITR3Category of Defect B/D
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Building tax payment deduction in rental Income
- PPF interest-As Exempt Income disclosure
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
