With the expansion of taxable supplies, not every goods and service are taxable. The government clearly defines GST exemptions. Understanding taxability also requires having complete knowledge of the exempted goods and services. Business owners can’t claim an input tax credit (ITC) for the sale of those goods and services.
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Let us look at the details list of the GST exemption list for services and goods.
GST Exemptions for Goods
There are a few goods that do not attract GST. The reasons for exempting those goods might include one of the following –
- In the interest of the public
- As per the GST Council’s recommendation
- Through Government’s special order
- Through an official notification
Types of GST Exemptions for Goods
1. Absolute Exemption
Here, the supply of goods is wholly exempted without considering the details of the supplier or receiver and whether the good is supplied within or outside the State.
2. Conditional Exemption
Here, the supply of certain goods is exempt from GST subject to certain conditions which have been specified under the GST Rules or any official order.
Here is the GST exemption list for goods.
Meat (fresh and frozen meat of sheep, goats, pigs, etc.), fish, natural products (honey, cheese, pasteurized milk, horses, etc.), fruit and vegetables (bananas, grapes, tomatoes, potatoes, etc.), dry fruits, tea, coffee, spices, grains, sugar, jaggery, baked goods (pizza base, puffed rice, etc.), and seeds.
Hand tools (spades, hammers, shovels, etc.), handmade musical instruments, tools used for agricultural purposes, and aids and implements used by physically challenged people (hearing aids, etc.)
3. Raw materials
Fabrics like raw silk, silk, wool (not processed), the cotton used for khadi yarn, raw jute fiber, khadi fabric, firewood, charcoal, and handloom fabrics.
Pottery items (earthen pots, clay lamps, etc.), printed items (printed books, maps, newspapers, etc.), human blood, bangles, props used in puja (kumkum, bindi, idols, etc.), kites, beehives, and vaccines.
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GST Exemptions for Services
There are three types of supply of services that fall under GST exemption. These are –
- Supplies that have a 0% tax rate
- Supplies defined under Section 2(78) of the GST Act
- Supplies that do not attract CGST or IGST due to the provisions stated in a notification, amending either Section 11 of CGST Act or Section 6 of IGST Act
Types of GST Exemptions for Services
Just like goods, there are two types of supply of services that are exempted under GST.
1. Absolute Exemption
Here, the service is exempted from GST without any terms and conditions.
2. Conditional Exemption
Here, the service is exempted from FST if the service is supplied intra-State or if a registered person supplies the service to an unregistered person. In such cases, GST would be exempted if the total value of such supplies received by a registered people not more than INR5000 per day.
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Here is the GST exemption list for services
1. Agricultural Services
It includes all agricultural services except the rearing of horses. These exempt services are cultivation, the supply of farm labor, harvesting, warehousing-related activities, fumigation, packaging, renting or leasing agricultural machinery, and the services provided by an Agricultural Produce Marketing Committee or a commission agent for buying or selling agriculture produce, etc.
2. Government Services
All services by the government are exempted from GST except for the following:
(i) Services by the Department of Posts via express parcel post, speed post, and agency services provided to a person other than Government;
(ii) Services in relation to a vessel/aircraft, within or outside the boundaries of an airport or a port;
(iii) Transport of goods or passengers; or
(iv) Any other service, except those covered under (i) to (iii) above, provided to business entities
3. Judicial Services
- Services offered by an arbitral tribunal to any individual other than a business entity or to a business entity with a turnover of not more than INR20 lakhs in the preceding financial years;
- Services offered by a senior advocate (legal services) to any individual or to a business entity with an aggregated turnover up to INR 20 lakhs in the preceding financial year;
- Services offered by a partnership firm of advocate(s) to an advocate or partnership firm of advocates, any individual that is not a business entity, or a business entity with a turnover up to INR20 lakhs in the preceding financial year.
4. Educational Services
- Transportation of students and faculty, examination services, mid-day meal scheme, and security and housekeeping services.
- Services offered by Indian Institutes of Management (except the Executive Development Programme).
5. Medical Services
Services offered by ambulance, charities, veterinary clinics, veterinary doctors, health-care services provided by clinics or paramedics, medical professionals, and organizations facilitating religious pilgrimage.
6. Organizational Services
Services offered by exhibition organizers for international business exhibitions, tour operators to foreign tourists (including tours conducted completely outside India), etc.
7. Transportation Services
- Transportation of goods by inland waterways;
- Payment of toll;
- Transportation of passengers by air (in the states of Meghalaya, Manipur, Arunachal Pradesh, Assam, Nagaland, Sikkim, Tripura, and Bagdogra);
- Transportation of goods by road (except when carried out by transportation agency or courier agency);
- Transportation of goods where the cost amount is less than INR1500;
- Transportation by non-AC horse or contract carriages;
- Transportation of salt, agricultural produce, newspapers, milk, or woodgrains.
8. Other Services
- Services offered by GSTN to the Central or State Government or Union territories;
- Services offered by libraries;
- Services offered by slaughterhouses;
- Admission fee payable to theatres;
- Services provided for public conveniences, such as lavatories, urinals, & toilets.
These exemptions help reduce the GST burden and contribute to the socio-economic development of the country.
You can have more details about other services exempted from GST under the CBEC’s official list.
Frequently Asked Questions (FAQs)
- Who can offer GST exemptions?
The Government can offer GST exemptions. After availing recommendations from the GST Council, the government sends out a notification for declaring exemption.
- From what date is GST exemption available?
GST exemption gets applicable from the day it was notified.
- Is GST registration required for businesses only supplying GST-exempt goods?
If the business is supplying only GST exemption goods or services, no registration is required.