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CA Final · Indirect Tax Laws · Exemptions from GST

Gopal runs a small kirana business in Pune and supplies only goods that are wholly exempt from GST. He has no other business, and his turnover is above the normal registration threshold. Which statement is correct?

Gopal is not liable to register. A person who supplies exclusively goods or services that are wholly exempt from tax is outside the registration requirement, even if his turnover exceeds the threshold, so there is no obligation to register, file nil returns or opt for composition.

  1. AHe must register as he crosses the threshold
  2. BHe is not liable to register, as he deals exclusively in wholly exempt goodsCorrect
  3. CHe must register and file only nil returns
  4. DHe must register under the composition scheme

Explanation

Persons engaged exclusively in supplying goods or services that are wholly exempt from tax are not liable to registration. The threshold test therefore does not apply to him. Exempt supplies are not counted against him for this purpose, so no registration, nil returns or composition option arises.

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