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

Kaveri Exports Pvt Ltd made zero-rated supplies of goods under a letter of undertaking. The FOB value in the shipping bill was Rs 50,00,000 and the value in the tax invoice was Rs 48,00,000. Under the explanation to the zero-rated refund formula in rule 89(4), what value of goods exported out of India is to be taken (ignoring the 1.5 times test)?

The value to be taken is Rs 48,00,000, because the explanation requires the lower of the FOB value in the shipping bill and the value declared in the tax invoice, and the invoice value is lower here.

  1. ARs 50,00,000, the FOB value
  2. BRs 49,00,000, the average of the two
  3. CRs 98,00,000, the sum of the two
  4. DRs 48,00,000, the lower valueCorrect

Explanation

The explanation says the value of goods exported is the FOB value declared in the shipping bill or the value declared in the tax invoice or bill of supply, whichever is less. The lower of 50,00,000 and 48,00,000 is 48,00,000. Option A takes the higher figure, which is wrong.

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