Exempt supply under GST means supplies which 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:-
Let’s understand the exemptions in each instance –
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 –
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 –
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 –
Moreover, there are two types of GST exemptions on goods. These are as follows –
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 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.|
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 –
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 –
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|
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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GST exemption is available from the date such exemption is notified.
Instead of a tax invoice, a bill of supply is required to be issued when the business is supplying GST exempt goods and services.
Yes, when preparing a GSTR-1 return, a consolidated detail of nil rates, GST exempted and non-GST supplies should be recorded separately.
GST exemptions can be offered by the Government. The Government notifies the exemption through a notification after availing recommendations from the GST Council.
No, registration of the business is not necessary if the business is supplying only GST exempt goods.