UPSC Prelims 2018 · Question 97 of 99

UPSC Prelims 2018 question on GST Exempted Items

Consider the following items:

1. Cereals grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material

Which of the above items is/are exempted under GST (Goods and Services Tax)?

  1. 1 only
  2. 2 and 3 only
  3. 1, 2 and 4 only
  4. 1, 2, 3 and 4
Show answer

Answer: A. 1 only

Analysis

Only item 1 is exempted, so the answer is (a) 1 only.

The Goods and Services Tax was implemented in India on 1 July 2017. While cereals, eggs and fish in their basic form are exempted, items 2 and 3 specify cooked eggs and processed and canned fish. These are the forms sold by restaurants and factories, and processing takes them outside the exemption. Item 1, cereal grains hulled, remains in the exempted category, since hulling does not amount to that kind of processing.

Statement by statement

Item 4 is INCORRECT. The government has clarified that newspapers containing advertising material are taxed, with the newspaper paying 5 percent GST on revenue earned from selling space, while being able to claim input tax credit for the tax paid by the advertising agency on the commission received.

Source

Times of India list of items exempted under GST.

How to crack it

Read the qualifier attached to each item, because the exemption turns entirely on the degree of processing rather than on the commodity. Cereals, eggs and fish all appear on the exempt list, so an aspirant who reads only the nouns will choose (d). The words hulled, cooked and processed and canned are the whole question.

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