Table of Contents
Introduction
The Goods and Services Tax, GST is the indirect tax applicable in India on the purchase of goods and services. The GST Council is tasked with the responsibility of recommending to Unions and States on important issues, including the goods and services that are to be exempted from GST. Section 11 of the CGST Act and/or Section 6 of the IGST Act hold the power to exempt from tax. These Sections are amended by the Government on recommendations from the Council by way of Notifications, either absolutely or conditionally exempt either the whole or part of the tax. Special Order Exemptions are done so under circumstances of a unique nature, to be stated in the order. Example: Exemption in Public Interest.
Meaning of Exempted
Some specific goods and services are exempt from GST. This means that the sale or purchase of them would not attract the levy of GST. Exempt Supply can be in the form of:
- Nil-Rated Supply: This supply attracts a 'NIL' rate of GST. Not to be confused with Zero rated. Nil-Rated supplies can be taken to a higher GST rate by the Government at a later date.
- Supplies that are fully or partially exempt from GST by way of a notification amending Section 11 of the CGST Act or Section 6 of the IGST Act.
- Non-Taxable Supplies: Section 2(78) lists the goods that do not come under the ambit of GST as a whole. Example- Alcohol for Human Consumption.
Types of GST Exemptions
- Absolute Exemption: Exemptions that are available on the full amount and that are not conditional or restricted. Example: Any Services provided by the Reserve Bank of India
- Conditional Exemption: These exemptions have some kind of conditions, limits or restrictions to avail them. Example: Services by an artist by way of a performance in folk or classical art forms of music/ dance/ theatre, if the consideration charged for such performance is not more than Rs 1,50,000 is exempt.
- Partial Exemption: Unregistered persons who supply goods within the state, intra-state, to a registered person are exempt from GST under reverse charge only if the aggregate value of supply is not more than Rs 5000 per day.
GST Exemption from Registration
The following are not liable to register for GST:
- Persons engaged exclusively in supplying goods/ services/ both that are not liable to tax/ wholly exempt from tax are exempt from registration. Example: A person providing Funeral services that are not liable to GST shall be exempt from registration.
- Agriculturists' exemption is limited to the supply of produce out of cultivation of land.
- Persons making only reverse charge supplies.
- Persons making inter-state supplies of taxable services up to Rs 20 lakh**
- Persons making inter-state taxable supplies of notified handicraft goods and notified hand-made goods up to Rs 20 lakh**
- Casual Taxable Persons making inter-State taxable supplies of notified handicraft goods and notified hand-made goods up to Rs 20 lakh**
- Persons making intra-state supplies of goods through an ECO with aggregate turnover not exceeding threshold limit and not making supply in more than one State/UT, with one enrolment number.
- Persons making supplies of services through an ECO [other than supplies specified under section 9(5)] with aggregate turnover up to Rs 20 lakh**
** Rs 10 lakh in the case of Special Category States of Mizoram, Tripura, Manipur and Nagaland.
GST Exemption for Businesses
Small and medium-scale businesses can avail of GST exemptions if their aggregate turnover is up to a specified limit. These limits are as follows –
- Businesses and individuals who are supplying goods can claim GST exemption if their aggregate turnover is less than Rs 40 lakhs in a financial year. The limit is Rs 20 lakh for the States of Jammu and Kashmir, Assam, Himachal Pradesh, Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, Puducherry and Telangana. The limit is Rs 10 lakh in the case of Special Category States of Mizoram, Tripura, Manipur and Nagaland. In the case of J&K, Assam and Himachal Pradesh the specific threshold limit is Rs 20 lakh for the supply of service/ both goods and service or Rs 40 lakh for only the supply of goods(Intra-state)
- For businesses and individuals involved in the supply of services, the limit for claiming GST exemption is less than Rs 20 lakhs in aggregate turnover. The limit is Rs 10 lakh in the case of Special Category States of Mizoram, Tripura, Manipur and Nagaland.
Exemption on Supply of Goods
Goods | Examples |
Live animals | Asses, cows, sheep, goats, poultry, etc. |
Meat | Fresh and frozen meat of sheep, cows, goats, pigs, horses, etc. |
Fish | Fresh or frozen fish |
Natural products | Honey, fresh and pasteurized milk, cheese, eggs, etc. |
Live trees and plants | Bulbs, roots, flowers, foliage, etc. |
Vegetables | Tomatoes, potatoes, onions, etc. |
Fruits | Bananas, grapes, apples, etc. |
Dry fruits | Cashew nuts, walnuts, etc. |
Tea, coffee and spices | Coffee beans, tea leaves, turmeric, ginger, etc. |
Grains | Wheat, rice, oats, barley, etc. |
Products of the milling industry | Flours of different types |
Seeds | Flower seeds, oil seeds, cereal husks, etc. |
Sugar | Sugar, jaggery, etc. |
Water | Mineral water, tender coconut water, etc. |
Baked goods | Bread, pizza base, puffed rice, etc. |
Fossil fuels | Electrical energy |
Drugs and pharmaceuticals | Human blood, contraceptives, etc. |
Fertilizers | Goods and organic manure |
Beauty products | Bindi, kajal, kumkum, etc. |
Waste | Sewage sludge, municipal waste, etc. |
Ornaments | Plastic and glass bangles, etc. |
Newsprint | Judicial stamp paper, envelopes, rupee notes, etc. |
Printed items | Printed books, newspapers, maps, etc. |
Fabrics | Raw silk, silkworm cocoon, khadi, etc. |
Hand tools | Spade, hammer, etc. |
Pottery | Earthen pots, clay lamps, etc |
Exemption on Supply of Service
Services | Examples |
Agricultural services | Cultivation, supplying farm labour, harvesting, warehouse-related activities, renting or leasing of agricultural machinery, services provided by a commission agent or the Agricultural Produce Marketing Committee or Board for buying or selling agricultural produce, etc |
Government services | Postal service, transportation of people or goods, services by a foreign diplomat in India, services offered by the Reserve Bank of India, services offered to diplomats, etc. |
Transportation services | Transportation of goods by road, rail, water, etc., payment of toll, transportation of passengers by air etc. |
Judicial services | Services offered by the arbitral tribunal, partnership firm of advocates, senior advocates to an individual or business entity whose aggregate turnover is up to INR 40 lakhs |
Educational services | Transportation of faculty or students, mid-day meal scheme, examination services, services offered by IIMs, etc. |
Medical services | Services offered by ambulances, charities, veterinary doctors, medical professionals, etc. This does not include hair transplants or cosmetic or plastic surgery. |
Organizational services | Services offered by exhibition organizers for international business exhibitions, tour operators for foreign tourists, etc. |
Other services | Services offered by GSTN to the Central or State Government or Union Territories, admission fees payable to theatres, circuses, sports events, etc. which charge a fee of up to INR 500 |