Introduction:

Exemptions from GST refers to the supply of goods and services which are exempted from charging GST. Exempt supply has been defined as supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax and includes non taxable supply. The government has classified certain goods and services as exempt from GST. This article aims to unravel the concept of exemptions from GST, providing businesses and individuals with insights into the areas where relief from this consumption-based tax is granted

Section 1: What are the types of supplies Exempt from GST?

There are mainly three types of supplies which have got exemptions from GST

1. Supplies which are taxable at NIL rate of tax
2. Supplies that are wholly or partially exempted from CGST or IGST, by way of a notification
3. Non-taxable supplies – its means a supply of goods or services or both which  is not taxable as defined under Section 2(78)  of the IGST Act.

Section 2: Power to grant exemptions from GST

Section 11 of the CGST Act/ Section 6 of the IGST Act grant the power to exempt from tax by way if issuance of Notification and special order. Central or the State Governments are empowered to grant exemptions from GST By way of issue of notification or by way of a special order.

Section 3: Types of Exemptions from GST

There are mainly two types of exemptions from GST, they are

1. Absolute Exemptions from GST – Certain goods and services are entirely exempt from GST without any conditions. This category includes essential items such as fresh fruits, vegetables, and healthcare services etc
2. Conditional or partial exemption – Some exemptions are subject to specific conditions. For instance, educational services may be exempt if provided by recognized institutions and leading to formal qualifications.

Section 4: What are the goods exempted from GST?

A list of items has been notified under section 11(1) of the CGST Act, 2017/section 6(1) of the IGST Act 2017. These items have been exempted from whole of the tax.

Under GST, Everyday items used by the common man, have been included in the list of exempted items. Items such as unbranded atta/ maida/besan, unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the items exempted from GST.

Section 5: What are the services exempted from GST?

1. Services related t charitable and religious activities
2. Agriculture related services
3. Education services
4. Health care services
5. Services provided by Government
6. Services of transport of passengers (with/without accompanied belongings)
7. Goods transportation service
8. Banking and financial Services
9. Service of Life insurance business
10.   General insurance business
11.   Services provided by specified bodies
12.   Pension Schemes
13.   Business facilitator/ correspondent
14.   Service provided to Government
15.   Leasing Services
16.   Legal Services
17.   Sponsorship of Sports
18.   Skill Development services
19.   Performance by an artist
20.   Right to admission to various events like museum, national park, wildlife sanctuary, tiger reserve or zoo. Etc

Conclusion:

Exemptions from GST serve as a balancing mechanism in the tax ecosystem, Exemptions from GST are particularly beneficial for small businesses. The relief enables them to navigate the complexities of the tax system more efficiently, fostering growth and sustainability. In the coming articles we shall discuss in details about each of the services exempted from GST.

Disclaimer: The content and views stated in this article is solely for informational purpose only

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