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CA Final · Indirect Tax Laws · Exemptions from GST

Anita Handlooms, an unregistered artisan, sells handmade cotton sarees only within Tamil Nadu, with an aggregate turnover of Rs 18 lakh in the year. A separate sole proprietor, Bharat, supplies only exempt goods and has turnover of Rs 60 lakh. Which statement on the interplay of exemption and registration is correct?

Neither person needs registration. Bharat supplies only wholly exempt goods, so registration liability does not arise regardless of turnover. Anita's turnover is below the threshold applicable to goods suppliers, so she is also not liable. Handmade character does not make her supplies taxable or force registration.

  1. AAnita needs no registration if she is below the threshold for her category of supply, while Bharat, supplying wholly exempt goods, is not required to register, since registration liability does not arise when all supplies are wholly exemptCorrect
  2. BBoth must register since turnover exceeds Rs 10 lakh
  3. CBharat must register because his exempt turnover crosses Rs 40 lakh
  4. DAnita must register because handmade goods are always taxable

Explanation

A person engaged exclusively in supplies of goods or services that are wholly exempt from tax is not liable to registration, so Bharat need not register despite high turnover. Anita's turnover of Rs 18 lakh is below the threshold for a supplier of goods in a normal-category state, so she is not liable either, and this does not depend on her goods being handmade. The options citing a Rs 10 lakh or Rs 40 lakh test misstate the rule.

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