UPSC Prelims 2018 Q97: Indian Economy – Taxation
Consider the following items:
1. Cereal 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)?
- (a) 1 only
- (b) 2 and 3 only
- (c) 1, 2 and 4 only
- (d) 1, 2, 3 and 4
Answer: (c) 1, 2 and 4 only
Explanation
GST Exemptions
| Item | GST Status | Detail |
|---|---|---|
| 1. Cereal grains hulled | EXEMPT | Whole/hulled cereal grains (rice, wheat, barley) are in the exempt category (0% GST). |
| 2. Chicken eggs cooked | EXEMPT | Fresh/cooked eggs are in the exempt list; poultry products not further processed are exempt. |
| 3. Fish processed and canned | TAXABLE | Processed and canned fish attracts GST (typically 12%). Only fresh fish is exempt. |
| 4. Newspapers containing advertising material | EXEMPT | Newspapers are in the exempt list (0%) regardless of advertising content, to preserve press. |
Answer: (c) 1, 2 and 4 only.
Why each option is right or wrong
- (a) Incorrect. Chicken eggs cooked (2) and newspapers (4) are also GST-exempt.
- (b) Incorrect. Cooked eggs (2) exempt but processed canned fish (3) attracts GST, so this pair is wrong.
- (c) CORRECT. Hulled cereal grains (1), cooked chicken eggs (2) and newspapers (4) are GST-exempt; processed canned fish (3) is taxable.
- (d) Incorrect. Processed canned fish (3) is taxable, not exempt.
Key point
GST exempt list highlights: Fresh food (unprocessed cereals, milk, eggs, fresh meat/fish, fresh vegetables/fruits), education/healthcare services, newspapers, printed books. Processing usually pushes into taxable slabs (5/12/18/28%).
Remember
Under GST, hulled cereal grains, cooked chicken eggs and newspapers (regardless of advertising content) are exempt (0% GST). However, processed and canned fish is taxable at 12%. Fresh/unprocessed food is generally exempt, but processing typically pushes items into taxable GST slabs.
Common mistakes
- Assuming all food items are GST-exempt - only fresh/unprocessed food is exempt; processed and packaged items typically attract GST.
- Confusing fresh fish (exempt) with processed/canned fish (taxable at 12%).
- Missing that newspapers are exempt regardless of advertising - special treatment to protect press freedom.
Exam tip
GST slabs: 0% (exempt - fresh food, education, healthcare, newspapers), 5% (essentials), 12%, 18% (standard), 28% (luxury, sin goods). Cess on select 28% items.
Sources
- GST Council - Notifications on Exempt Items (0% GST)
- Central Board of Indirect Taxes and Customs — Notification No. 2/2017-Central Tax (Rate): goods exempted from GST