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CA Intermediate · Taxation · Exemptions from GST

Gramin Sahkari Credit Society in Nashik, not registered under GST for exempt supplies, provided these services in a month: interest of Rs 5,00,000 on loans to its members, a processing fee of Rs 40,000 for loans, and rent of Rs 60,000 for letting out a commercial shop it owns. Services by way of extending deposits, loans or advances where the consideration is interest or discount are exempt. Processing fee is a separate consideration. Considering only this exemption, and ignoring other exemptions, what is the value of exempt supply and the value on which GST applies?

Exempt supply is Rs 5,00,000 and taxable value is Rs 1,00,000. The exemption covers loans where consideration is interest, so only the interest qualifies. The processing fee of Rs 40,000 is a separate consideration and the commercial shop rent of Rs 60,000 is not exempt, so together they are taxable.

  1. AExempt Rs 5,00,000; taxable Rs 1,00,000Correct
  2. BExempt Rs 5,40,000; taxable Rs 60,000
  3. CExempt Rs 5,60,000; taxable Rs 40,000
  4. DExempt Rs 6,00,000; taxable nil

Explanation

Interest of Rs 5,00,000 is covered by the exemption as the consideration is interest. Processing fee of Rs 40,000 is not interest, so it is taxable, and so is the commercial rent of Rs 60,000. Taxable = 40,000 + 60,000 = Rs 1,00,000. Option 2 wrongly treats the processing fee as exempt.

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