Question map
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) ?
Explanation
The correct answer is Option 3 (1, 2 and 4 only). Under the GST regime, exemptions are generally granted to essential commodities and items of mass consumption in their primary or unbranded form.
- Cereal grains hulled (1): While "hulled" grains are processed, the GST Council exempts them as long as they are not sold in unit containers with a registered brand name.
- Chicken eggs cooked (2): Fresh eggs are exempt. Once cooked or boiled, they are still considered basic food items and remain exempt under the specific classification for non-processed eggs.
- Newspapers containing advertising material (4): Newspapers are specifically exempted from GST to protect the freedom of information, regardless of the advertising content they carry.
- Fish processed and canned (3): This is incorrect because processing and canning signify high-value addition. Such items are typically taxed at 5% or 12%, unlike fresh or chilled fish which is exempt.
Therefore, items 1, 2, and 4 fall under the exemption list, making Option 3 the correct choice.
PROVENANCE & STUDY PATTERN
Full viewThis question masquerades as a memory test but is actually a logic puzzle based on the 'Value Addition' principle of GST. You don't need the full rate list; you only need to distinguish between 'Raw/Essential' (Exempt) and 'Processed/Preserved' (Taxed) to eliminate the wrong options.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Under the Indian GST (Goods and Services Tax) regime as of 2018, are cereal grains hulled exempt from GST?
- Statement 2: Under the Indian GST (Goods and Services Tax) regime as of 2018, are chicken eggs cooked exempt from GST?
- Statement 3: Under the Indian GST (Goods and Services Tax) regime as of 2018, are fish processed and canned exempt from GST?
- Statement 4: Under the Indian GST (Goods and Services Tax) regime as of 2018, are newspapers containing advertising material exempt from GST?
States that "certain products are outside GST" and gives examples (VAT on fuel, mandi tax, electricity, petroleum) — showing some items remain outside or treated specially under GST.
A student could use this pattern to infer that staples might similarly be on a special/exempt list and then check the official GST exemption schedules for cereals/husked grains.
Defines taxable event under GST as 'supply' of goods/services and emphasizes GST is a consumption-based tax applicable to goods.
One could apply this rule to hulled cereal grains (a 'good') to reason they would be taxable unless specifically listed as exempt — so check exemption notifications for cereals.
Explains GST replaced many indirect taxes and is the single comprehensive indirect tax on supply of goods/services.
Using this, a student would expect treatment of cereal grains to be governed by the GST schedules/notifications that replaced earlier tax treatment (e.g., whether mandi/VAT exemptions transferred into GST).
Notes GST is imposed nationwide with CGST/SGST/IGST and that rates/exemptions are determined under the GST framework.
This implies any exemption for hulled grains would appear in central/state GST acts or GST Council notifications — so check those sources for cereals/hulled grain entries.
Gives an example (electricity) of items kept out of GST and discusses how embedding of such taxes affects competitiveness — highlighting that policy choices left some essential inputs or items outside GST.
A student could reason that policymakers may have treated basic food items (like cereals) specially and should verify whether hulled grains are listed among exempt goods.
Gives an illustrative list of items taxed at 0% under GST and explicitly lists 'eggs' (alongside fresh meat, fish, chicken).
A student could check whether the 0% listing for 'eggs' in 2018 covered only raw/uncooked eggs or included prepared/cooked egg preparations by consulting the GST rate schedule or chapter/heading notes for food preparations.
States GST is levied on the 'supply' of goods/services and is consumption-based, indicating that the form in which a good is supplied (raw vs. processed) can affect tax treatment.
Use this rule to ask whether cooking transforms eggs into a different taxable 'supply' category (e.g., prepared food) that attracts a non-zero GST rate.
Explains GST applies on supply from manufacturer/provider to consumer nationwide and that items are assigned rates (including 0%), implying classification matters for rate determination.
A student can extend this by checking GST rate notifications/HS codes for 'prepared eggs' or restaurant/ready-to-eat items to see if they fall outside the 0% list.
Notes that the GST Council makes decisions on rates and exemptions (including threshold and item lists), indicating authoritative rate changes or clarifications would be in Council decisions.
A student could review GST Council decisions or notifications around 2017–2018 to see any explicit categorisation or clarification about cooked/processed eggs.
Describes the CGST/SGST/IGST framework and that GST is a value-added tax, suggesting processed/ value-added forms of goods might be treated differently from raw goods.
Apply this to consider whether cooking (value addition) could remove an item from the 0% 'raw eggs' category and place it into a taxable bracket.
Gives an illustrative GST 0% list that explicitly includes 'fresh meat, fish, chicken', indicating fresh fish was treated as zero‑rated/exempt in lists of examples.
A student could use this to infer that 'fresh fish' is likely exempt but would then check whether processing (e.g., canning) removes that exemption in official tariff/resolution lists.
States that GST taxable event is 'supply' of goods/services and that GST has distinct rate categories (0,5,12,18,28%), implying classification depends on the nature/form of the supplied good.
A student could apply this rule to ask whether 'processed/canned' is a different supply classification from 'fresh' and thus liable to a non‑zero GST rate.
Explains GST is a single comprehensive, destination‑based consumption tax applicable to supply of goods, replacing many earlier taxes—classification matters for rates.
A student could combine this with the 'fresh fish' zero‑rating example to seek the official HSN/notification that distinguishes processed food products under GST.
Notes GST is a value‑added tax imposed on sale/supply with central/state components and rate distinctions, so exemptions depend on statutory rate lists/notifications.
Use this to motivate checking central/state GST notifications/HSN codes for canned/processed fish to see if they fall under zero or positive rates.
Mentions certain products are outside GST or have embedded taxes not refunded for exports, signaling there are specific carve‑outs/exceptions in GST policy.
Prompt a student to verify whether processed/canned fish is explicitly carved out, or instead included under taxable supplies distinct from 'fresh fish'.
Defines the taxable event under GST as 'supply' and that GST is a consumption-based tax — which frames whether a newspaper (or the advertising in it) is treated as a taxable supply.
A student could apply this by asking whether sale/distribution of newspapers or sale of advertising space count as 'supply' under GST and then check exemption notifications for supplies classified as newspapers or advertising.
Explains GST structure (CGST/SGST/IGST) and that GST is a value-added tax replacing prior taxes — implying specific goods/services can be taxed or exempted within the GST framework.
Use this to infer that newspapers may be either placed in an exempt category or taxed at a specific GST rate, so the student should consult the GST rate schedule or exemption list for 'newspapers' and 'advertising services'.
Gives an example of items kept out of GST (e.g., electricity) and notes certain items remain outside GST, showing the regime allows explicit exclusions.
From this pattern, a student could reasonably look for a specific exclusion or inclusion decision by the GST Council or in GST schedules for newspapers/advertising to determine exemption status.
States there is no uniform tax rate under GST, indicating differentiated treatment across goods/services (rates or exemptions) is normal.
A student can extend this by checking whether newspapers or advertising fall under a nil rate, reduced rate, or exemption in the GST rate lists published in 2017–2018.
Notes GST replaced many earlier indirect taxes and was implemented nationwide from 1 July 2017, so any pre‑GST exemptions/levies on newspapers could have been reclassified under GST rules.
A student could compare pre‑GST treatment of newspapers (if known) with the GST schedules/notifications issued after July 2017 to see how newspapers with advertising were classified in 2018.
- [THE VERDICT]: Logical Trap (Solvable by Elimination). Source: Applied Common Sense on GST Principles (Raw vs. Processed).
- [THE CONCEPTUAL TRIGGER]: Indian Economy > Fiscal Policy > GST > The distinction between the 'Common Man's Basket' (0%) and Value-Added Goods.
- [THE HORIZONTAL EXPANSION]: Memorize the 'Essential List' logic: Exempt = Fresh Meat/Fish, Fresh Milk, Curd, Natural Honey, Fresh Veg, Unbranded Cereals, Salt, Bindi, Newspapers, Judicial Papers. Taxable = Branded/Packed Cereals, Butter, Cheese, Frozen Veg, Canned Food.
- [THE STRATEGIC METACOGNITION]: Never memorize the 1200+ item rate list. Instead, internalize the tax policy logic: 'Is this item essential for survival and sold in its raw form?' If yes, likely Exempt. 'Is it processed, canned, or cooked?' If yes, likely Taxed.
Whether an item (e.g., hulled cereal grains) attracts GST depends on whether its supply qualifies as the taxable event and on the destination-based rule for consumption.
High-yield for UPSC: mastering the notion of 'supply' as the taxable event and destination-based taxation helps answer many GST questions about tax incidence, exemptions and interstate vs intrastate supplies. Connects to tax law interpretation and fiscal federalism questions; practice by mapping examples (goods, services, exemptions) to the 'supply' concept.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Details about GST > p. 91
- Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Box 5.3: GST: One Nation, One Tax, One Market > p. 82
Exemption status or tax applicability can differ by whether a transaction is intrastate (CGST+SGST) or interstate (IGST) — relevant if grain movement crosses states.
Important for UPSC because many questions test knowledge of centre-state tax division and practical implications of IGST vs CGST/SGST on revenue sharing and compliance. Understanding this enables correct reasoning about which statute/rate applies in varied supply scenarios.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Goods and Services Tax (GST): > p. 174
Some supplies (e.g., exports) are zero-rated and certain levies remain outside GST; knowing these categories is needed to judge if a commodity is exempt or outside GST.
High utility: questions often ask which items are exempt, zero-rated, or outside GST. Grasping zero-rating and exclusions helps in policy evaluation and fiscal questions; practice by studying examples (exports, electricity exclusions, embedded levies).
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Remission of Duties or Taxes on Exported Products (RoDTEP) > p. 180
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Challenges: > p. 179
Reference [3] provides an illustrative list of goods taxed at 0%, and 'eggs' appear on that list — relevant to whether eggs are GST-exempt.
High-yield for UPSC: knowing which goods are specifically listed as 0%/exempt helps answer policy and taxation questions. It connects to classification issues (raw vs. processed) and to questions on tax incidence and welfare. Study approach: memorise common 0% categories and understand official lists and their limits.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Details about GST > p. 92
References [2] and [5] state that GST's taxable event is 'supply' and that GST is a destination-based consumption tax — crucial for deciding whether processed or cooked goods are taxed.
Important concept: whether an item (e.g., cooked eggs) is taxable can hinge on how 'supply' is interpreted and the place of consumption. Mastering this helps answer questions on classification of goods vs. services, inter-state vs. intra-state supplies, and implications for IGST/CGST/SGST. Preparation: focus on definitions in GST law and examples of supply vs. exempted items.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Details about GST > p. 91
- Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Box 5.3: GST: One Nation, One Tax, One Market > p. 82
References [6] and [10] describe the GST Council's establishment and its role in decisions (including rates/exemptions), which determine which items (raw or cooked) are taxed.
Strategically important for UPSC: policy formation and institutional mechanism questions often hinge on the GST Council's powers and decisions. Knowing this links rate/exemption outcomes to institutional processes. Study approach: learn the Council's composition, powers and examples of major rate/exemption decisions.
- Indian Polity, M. Laxmikanth(7th ed.) > Chapter 47: Goods and Services Tax Council > ESTABLISHMENT > p. 434
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > GST Council - Decisions Made > p. 94
One reference lists illustrative goods (including 'fish') under the 0% GST category; this is directly relevant to whether specific food items are exempt.
High-yield: UPSC often asks which goods/services attract which GST rates or are exempt. Mastering how the 0% list is presented (illustrative vs exhaustive) helps answer questions about exemptions and edge cases (e.g., processed vs fresh). Connects to taxation policy, public finance and classification/HSN issues. Practice by memorising common exempt items and understanding phrasing like 'illustrative list' vs statutory schedules.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Details about GST > p. 92
The 'Branded vs. Unbranded' Distinction. While 'Hulled Cereal' is exempt, 'Cereal put in a unit container and bearing a registered brand name' is Taxable (5%). This nuance is the next logical trap.
The 'Factory vs. Farm' Rule. Look at the items: 'Cooked' eggs and 'Canned' fish imply factory/restaurant processing (Value Addition). GST taxes value addition. Therefore, 2 and 3 must be taxable. Eliminate Options B, C, and D because they all contain 2 or 3. You are left with Option A automatically, without even knowing the status of Newspapers.
Mains GS-3 (Inclusive Growth & Budgeting): Discuss why Indirect Taxes are regressive. Exempting items like 'Cereal' and 'Fresh Fish' is a policy tool to protect the poor's consumption basket from inflation.