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GST Exemption refers to the exclusion of certain goods and services from GST, ensuring no tax is charged on their supply.
Who grants GST Exemptions?
Key features include entry barriers, product differentiation, the number of sellers and buyers, and the stability of prices.
Can businesses claim ITC on exempted supplies?
No, businesses cannot claim Input Tax Credit (ITC) on exempted supplies under GST.
GST Exemption, Meaning, Types, List of Exempted Goods and Services
Learn about GST Exemption, its types, and how it applies to goods and services. Understand supplier-based, supply-based, absolute, and conditional exemptions with detailed insights and examples.
Mridula Sharma18 Feb, 2025
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GST Exemption is a crucial aspect of India's tax framework, ensuring that certain essential goods and services remain affordable by eliminating the tax burden on them. The concept of GST Exemption applies to various sectors such as healthcare, education, agriculture, and public welfare services.
Understanding the intricacies of GST Exemption is essential for CA exams, tax professionals, and business owners to ensure compliance and optimize tax planning strategies.
What is GST Exemption?
GST Exemption refers to the exclusion of specific goods and services from the levy of Goods and Services Tax (GST). When a supply is exempt from GST, the supplier does not collect tax from the recipient, thereby reducing the overall cost to the end consumer. These exemptions are granted by both the Central and State Governments based on economic and social priorities.
GST Exemption plays a significant role in promoting affordability and economic balance. Essential commodities such as fresh food, education, and healthcare services remain accessible to the public due to these exemptions. Additionally, it simplifies compliance for small businesses and charitable organizations.
Types of GST Exemptions
GST exemptions play a crucial role in reducing the tax burden on essential goods and services. Understanding these exemptions helps businesses and individuals comply with tax regulations while benefiting from applicable reliefs.
Supplier-Based Exemption
Certain suppliers qualify for GST Exemption regardless of the goods or services they provide. This exemption is often granted to nonprofit entities and public welfare organizations.
Example Charitable institutions providing healthcare or educational services are exempt from GST, ensuring affordable access to essential services.
Supply-Based Exemption
Goods and services essential to the economy and society qualify for GST Exemption regardless of the supplier.
Example Healthcare services, educational services, and public utility services such as water supply are exempt from GST to ensure public welfare.
Absolute Exemption
This is a complete GST Exemption, where certain supplies are permanently excluded from GST without any conditions.
Example Electricity distribution by authorized utility providers is fully exempt from GST, reducing costs for consumers.
Conditional or Partial Exemption
Some exemptions apply only under specific conditions, such as turnover limits or usage restrictions.
Example Hospital room charges below INR 5,000 per day (excluding ICUs) are exempt from GST, making healthcare more affordable.
List of Goods Exempted from GST
GST Exemption applies to numerous goods, ensuring affordability and accessibility. Some key categories include:
List of Goods Exempted from GST
Category
Exempted Goods
Animal Products
Live Animals: Asses, cows, sheep, goats, poultry
Meat: Fresh and frozen meat from sheep, cows, goats, pigs, and horses
Fabrics: Raw silk, silkworm cocoons, khadi, cotton, wool, synthetic fabrics Hand Tools: Spade, hammer, gardening tools
Pottery: Earthen pots, clay lamps
List of Services Exempted from GST
Several service sectors benefit from GST Exemption, ensuring essential services remain accessible to all.
1. Agricultural Services
Agricultural activities except horse breeding are exempt. This includes:
Cultivation, harvesting, and farm labor supply
Fumigation, packaging, and warehouse operations
Leasing of agricultural machinery
Sale/purchase services by Agricultural Produce Marketing Committees
2. Transportation Services
GST exemptions cover:
Toll-paid road or bridge transportation
Goods transportation (except courier services)
Inland waterway goods transportation
Passenger air transport in northeastern states & Bagdogra
Non-AC or contract carriage transport
Transporting agricultural produce, milk, salt, newspapers, or wood grains
Goods transport with a total charge under INR 1500
Hiring services for public transport vehicles with 12+ passengers
3. Government and Diplomatic Services
GST-free government services include:
Foreign diplomatic missions in India
Reserve Bank of India services
Excludes postal services (speed post, express parcel) and transport-related services
4. Judicial Services
Exemptions include:
Services by arbitral tribunals to non-business entities
Legal services by senior advocates to small businesses
5. Educational Services
GST exemption applies to:
School transportation and mid-day meal catering
Admissions and examination-related services
Security and housekeeping for educational institutions
Indian Institutes of Management (except Executive Development Programs)
Coaching services under government scholarship schemes
6. Medical and Healthcare Services
GST-free medical services include:
Veterinary clinics and animal care
Healthcare services by clinics or paramedics
Ambulance services and charitable medical institutions
Religious pilgrimage facilitation
7. Organizational and Event Coordination
Exemptions apply to:
International business exhibitions
Tour operator services for foreign tourists outside India
8. Miscellaneous Services
Tax-free services include:
Electricity transmission and distribution
Services by recognized sports bodies
Journalism and news agencies (e.g., Press Trust of India)
Public libraries, toilets, and washrooms
State transport vehicle rentals
Overloading charges at toll plazas
9. New Exemptions
Recent additions to GST-free services include:
GST Network (GSTN) services to government bodies
Back-office services
Residential property rentals under INR 1000/day
IGST exemption on leased imports transferred to new lessees
Tax relief on air/sea exports extended until September 30, 2022
Entry to entertainment parks, museums, and wildlife sanctuaries below INR 250/person
By understanding these GST-exempt goods and services, businesses and consumers can optimize their financial decisions while ensuring compliance with tax regulations.
For comprehensive CA exam preparation and guidance on GST concepts, enroll in PW CA Courses today!
