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

Under Rule 89(4), for zero-rated supply of goods without payment of tax, the 'turnover of zero-rated supply of goods' is taken as the lower of the value of such supply and a stated multiple of the value of like goods domestically supplied. What is the multiple? Domestic like goods are valued at ₹10,00,000 and the export value is ₹16,00,000. What is the turnover figure used?

The multiple is 1.5 times the value of like domestic goods. Here 1.5 x ₹10,00,000 equals ₹15,00,000, which is lower than the export value of ₹16,00,000, so the turnover of zero-rated supply of goods is ₹15,00,000.

  1. A1.5 times; ₹15,00,000Correct
  2. B1.5 times; ₹16,00,000
  3. C2 times; ₹16,00,000
  4. D1.5 times; ₹10,00,000

Explanation

The rule takes the lesser of the zero-rated supply value and 1.5 times the value of like goods domestically supplied. 1.5 x 10,00,000 = 15,00,000, which is less than 16,00,000, so ₹15,00,000 is used. Option B ignores the cap.

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