Skip to content

CMA Final · Indirect Tax Laws and Practice · Zero Rated Supplies and Deemed Exports

Apex Exports Ltd made zero-rated supplies of goods under LUT of ₹40 lakh (already the permitted value) and no zero-rated services. Its other turnover in the State is domestic taxable goods ₹60 lakh, and it has exempt goods supplies of ₹20 lakh. There are no other services. Net ITC on inputs and input services is ₹9 lakh. Using the Rule 89(4) formula, with adjusted total turnover excluding exempt supplies other than zero-rated, what is the maximum refund?

The maximum refund is ₹3.6 lakh. Adjusted total turnover is ₹100 lakh because exempt supplies are excluded. Refund equals zero-rated turnover ₹40 lakh multiplied by net ITC ₹9 lakh and divided by ₹100 lakh.

  1. A₹3.6 lakhCorrect
  2. B₹4.5 lakh
  3. C₹3.0 lakh
  4. D₹2.25 lakh

Explanation

Adjusted Total Turnover excludes exempt supplies other than zero-rated: 40 + 60 = ₹100 lakh. Refund = 40 x 9 / 100 = ₹3.6 lakh. Including the exempt ₹20 lakh would give 40 x 9 / 120 = ₹3.0 lakh, which is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Zero Rated Supplies and Deemed Exports shows your real accuracy, how long you take and where you lose marks.

Practise Zero Rated Supplies and Deemed ExportsFree diagnostic mock

More Zero Rated Supplies and Deemed Exports questions