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List of Goods and Services Exemptions under GST Act

  • Posted By SuperCA
  • On 04 August

List of Goods and Services Exemptions under GST Act

What is Exempt Supply

Exempt supply under GST means supplies which do not attract goods and service tax. In these supply no GST is charged. Input tax credit paid on these supplies will not be able for utilisation. These are the following three types of supply which are considered as exempt supply:-

 

  • supplies which are chargeable to nil rate tax.
  • supplies which are partially and wholly exempt from the charge of GST by the notifications which amended the section 11 of CGST and section 6 IGST.
  • supplies which comes under the sec 2(78) of the Act. which covers the supplies which are not taxable under the Act like alcoholic liquor for human consumption.

 

Classification of Exemptions

Supplier may be exempt – Exemption to the person making supplies-i.e  supplier, regardless of the nature of outward supply.

(Ex: Services by Securities and Exchange Board of India, Services by Charitable entities.

 

Certain Supplies may be exempt –Certain supplies due to their nature and type are exempted from GST. All supplies that are notified would be eligible for the exemption. Here, irrespective of who the supplier is, exemption is allowed. not very much relevant.

(Ex: Services by way of sponsorship of sporting events, Services by way of public conveniences

 

Types of Exemptions

 

Absolute exemption: Exemption without any conditions.

Ex: Transmission or distribution of electricity by an electricity transmission or distribution utility, Services by Reserve Bank of India.

 

Conditional Exemption: Exemption subject to certain conditions.

Ex: Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation less than ` 1000/- per day".

 

Conditional or partial exemption

Eg- Intra-State supplies of goods and/or services received from an unregistered person by a registered person is exempted from payment of tax under reverse charge provided the aggregate value of such supplies received by a registered person from all or any of the suppliers does not exceed ` 5000/- in a day.

 

GST exemption from registration

Agriculturists

➤ People who fall in the threshold exemption limit of turnover for supply of goods INR 40 lakhs and for supply of services INR 20 lakhs and for specified category INR 20 lakh and INR 10 lakh.

➤ People who are making NIL Rated and exempt supply of goods and services such as fresh milk, honey, cheese, agriculture services etc.

➤Person making activities which are not covered under the supply of goods and services such as funeral services , petroleum products etc.

➤ People making supplies that are covered under reverse charge such as tobacco leave, cashew nuts(not shelled and peeled ) etc.

 

GST Exemption for Businesses

Small and medium scale businesses can enjoy GST exemptions if their aggregate turnover is up to a specified limit. When the GST Act was launched, this limit was INR 20 lakhs for individuals and businesses and INR 10 lakhs for hilly states and North-eastern States of India. However, in the 32nd GST Council Meeting, which was held in January 2019, the limits have been changed. These limits are as follows –

 

➤ Businesses and individuals who are supplying goods can claim GST exemption if their aggregate turnover is less than INR 40 lakhs in a financial year.

➤ For hilly and north-eastern States of India, the limit has been revised to INR 20 lakhs.

➤ For businesses and individuals involved in the supply of services, the limit for claiming GST exemption is INR 20 lakhs

➤ In case of hilly and north-eastern States, if the aggregate turnover is up to INR 10 lakhs, businesses and individuals supplying services can claim GST exemptions.

 

Hilly and north-eastern States would include Arunachal Pradesh, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Tripura, Nagaland, Sikkim, Meghalaya, Mizoram, Assam and Manipur.

 

Aggregate turnover, as per the GST Act, would include the aggregate value of all types of taxable supplies, inter-state supplies, exempt supplies and the goods and services which have been exported. The following, would, however, be deducted from the value of aggregate turnover -

 

➤ CGST, SGST or IGST already paid by the investor

➤ Taxes which are payable on the basis of reverse charge mechanism

➤ Value of the inward supply of goods and services

➤ Value of non-taxable goods and services

 

GST Exemptions for Goods

 

There is a list of goods which do not attract GST as recommended by the GST Council. The reasons for granting exemption on goods might include any of the following –

 

➤ In the interest of the public

➤ The exemption is as per the GST Council’s recommendation

➤ The exemption is granted by the Government through a special order

➤ The exemption is allowed on specific goods through an official notification

 

Moreover, there are two types of GST exemptions on goods. These are as follows –

 

Absolute exemption - Under this type of exemption, the supply of specific types of goods would be exempted from GST without considering the details of the supplier or receiver and whether the good is supplied within or outside the state.

 

Conditional exemption – Under this type of exemption, supply of specific types of goods would be GST exempt subject to certain terms and conditions which have been specified under the GST Act or any amendment or notification.

 

Here is a list of some of the most common goods which are GST exempt –

 

Types of goods

Examples

Live animals

Asses, cows, sheep, goat, 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.

 

GST Exemption on services

 

Just like specific goods, specific services are also GST exempt. There are three types of supply of services which would qualify for GST exemption. These include the following –

 

➤ Supplies which have a 0% tax rate

➤ Supplies which do not attract CGST or IGST due to the provisions stated in a notification which amends either Section 11 of CGST Act or Section 6 of IGST Act

➤ Supplies which are defined under Section 2(78) of the GST Act which are not taxable.

Since these types of supplies are GST exempt, any Input Tax Credit which is applicable on these supplies would not be available to utilise or set off the GST liability.

 

Moreover, even under supply of services, there can be two types of GST exemptions which are as follows –

 

➤ Absolute exemption wherein the service would be exempted from GST without any conditions

➤ Conditional exemption or partial exemption wherein exemption is granted based on a condition. This condition states that if the service is supplied intra-State or if the service is supplied by a registered person to an unregistered one, GST would be exempted if the total value of such supplies received by a registered person is not more than INR 5000/day.

 

Here is a list of some of the services which enjoy GST exemption

Types of services

Examples

Agricultural services

Cultivation, supplying farm labour, harvesting, warehouse related activities, renting or leading agricultural machinery, services provided by a commission agent or the Agricultural Produce Marketing Committee or Board for buying or selling agriculture 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, transportation of goods where the cost of transport is less than INR 1500, etc.

Judicial services

Services offered by 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 ambulance, charities, veterinary doctors, medical professionals, etc.

Organizational services

Services offered by exhibition organisers 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 fee payable to theatres, circuses, sports events, etc. which charge a fee up to INR 250

 

Cessation

 

Though GST is applicable for all businesses and on the supply of goods and services, the above-mentioned exemptions are available. These exemptions reduce the GST burden and help in the socio-economic development of the country.

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