Exempt Supply

[Ethirajan Parthasarathy]

The exempted supply for purpose of Rule 42 & 43 shall not include value of services by way of accepting deposits, extending loans or advances in so far as consideration is represented by way of interest or discount.

The exclusion is linked to consideration by way of interest or discount.

In view of this, my view is Rental / Security deposit (received / given) and staff loan given which are interest free will form part of exempted turnover both for purpose of arriving at “Aggregate Turnover” as well as for purpose of Rule 42 & 43.

Experts may give their view.

AI Summary

Exempt supply exclusion for interest-based deposit services clarified; interest-free rental and security deposits not automatically exempt.
Exempt supply excludes services of accepting deposits or extending loans insofar as consideration is interest or discount; this exclusion hinges on the nature of the consideration. Opinions differ on whether transactions in money (such as rental/security deposits or interest-free staff loans) qualify as exempt supply: one view says monetary transactions are not goods/services and thus not exempt, while another argues that interest-free deposits and staff loans are distinct from deposit/loan services and rental deposits cannot be treated as exempt income.