CA Final · Indirect Tax Laws · Exemptions from GST
Mehta Distillers Ltd, Nashik, makes the following supplies during a month: (i) export of readymade garments under a Letter of Undertaking without payment of IGST, (ii) sale of mobile phones to retailers, (iii) sale of alcoholic liquor for human consumption to licensed wholesalers, and (iv) a taxable service on which the recipient pays tax under reverse charge. Which of these is an 'exempt supply' under the GST law?
Sale of alcoholic liquor for human consumption is an exempt supply because it is a non-taxable supply, and the definition of exempt supply includes non-taxable supplies along with nil-rated and wholly exempted supplies. Zero-rated exports and ordinary taxable supplies, including reverse charge ones, are not exempt supplies.
- AExport of readymade garments under LUT
- BSale of mobile phones to retailers
- CSale of alcoholic liquor for human consumptionCorrect
- DTaxable service on which the recipient pays tax under reverse charge
Explanation
Exempt supply includes supply of goods or services that attract nil rate of tax, that are wholly exempt by notification, and non-taxable supplies. Alcoholic liquor for human consumption is outside GST, so it is a non-taxable supply and therefore an exempt supply. Exports under LUT are zero-rated, not exempt. Mobile phones and the reverse-charge service are taxable supplies.
Did you get it right without looking?
One question tells you little. A timed set on Exemptions from GST shows your real accuracy, how long you take and where you lose marks.
More Exemptions from GST questions
- Under the GST law, the Government wishes to grant exemption from tax on a particular supply of goods in public interest. Which statement is …
- Manoj Traders supplies both taxable goods and wholly exempt goods. For a month, total ITC is ₹5,00,000, of which ₹50,000 is blocked credit, …
- Ramesh, a farmer in Nashik, grows grapes and sells them fresh in the market. He also dries a portion into raisins in his own farm shed and s…
- Ravi Exports, Surat, supplies goods to a customer in Mumbai. The goods are covered by an exemption notification that exempts them fully from…
- Lifeline Hospital, a clinical establishment, admits Mr. Rao for a surgery. For one package price it provides the surgery, nursing, the room,…
- 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 turnov…