Q1. Alal automobile dealer, who is a registered dealer in Punjab, supplied a motorcar to Mr. Rohit inThe dealer also supplied registration, insurance and free maintenance services for certain period along with thesupply of car. The supply of motor car is taxable @ 28%, Insurance service e 18%. Registration andmaintenance services @ 12% each. What is the type of supply and at what rate GST is chargeable? Give thereasons of your answers
Answers
The GST rates applicable to the composite supply are 28% for the motorcar, 18% for insurance services, and 12% each for registration and maintenance services.
Explanation:
The type of supply in this scenario is a composite supply. A composite supply refers to a supply consisting of two or more taxable supplies of goods or services, which are naturally bundled and supplied together in the ordinary course of business.
In this case, the automobile dealer is supplying a motorcar along with additional services such as registration, insurance, and maintenance. These services are naturally bundled with the supply of the motorcar as they are provided together as a package and are essential for the functioning and use of the motorcar.
Now, let's determine the applicable GST rates for each component of the composite supply:
- The supply of the motorcar itself is taxable at a rate of 28% as per the GST regulations for motor vehicles.
- The insurance service provided along with the motorcar is taxable at a rate of 18% as per the GST regulations for insurance services.
- The registration and maintenance services provided are both taxable at a rate of 12% each as per the GST regulations for such services.
Therefore, the GST rates applicable to the composite supply are 28% for the motorcar, 18% for insurance services, and 12% each for registration and maintenance services.
It is important to note that these rates may be subject to any updates or changes in the GST regulations by the relevant authorities.
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