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Why exempt supply includes non taxable supply
non taxable supply are those supply which are not leviable to tax, but exempt supply are taxable supply as they are leviable to tax and thereafter get exempted so why non taxable supply included in exempt supply even if a non taxable supply out of the scope of taxable supply
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The inclusion of non-taxable supply inside the definition of exempt supply highlighted is a deliberate legal fiction created by lawmakers. While non-taxable supplies sit outside the levy of GST, bundling them under the "exempt supply" definition ensures that businesses must count their non-GST revenue when calculating threshold limits for Aggregate Turnover (Section 2(6)) and must proportionally reverse input tax tax-credits on common business expenses under ITC Reversal rules (Section 17(2) & (3)).
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