GST Exemption: List of Exempted Goods and Services Under GST

GST exemptions exclude specific goods or services from GST applications. The GST Act does not cover certain items or services. It's important to remember that these exemptions can differ from one country to another and may change over time.Governments grant exemption from GST for several reasons. They may alleviate the tax burden on essential goods and services that citizens need.Furthermore, authorities can use exemptions to support particular sectors or industries. Also read: How Is GST Different From Previous Tax Structure? Understanding the list of exemptions from GST is as important as knowing what Goods and Services Tax taxes are. Like all other taxes, there are a few exemptions under GST where goods and services are exempt from tax liability. Examples of exemptions under Goods and Services Tax:Supplies Under GST Exemption List

• Goods like petrol, alcohol, etc., do not attract GST for supply under the GST Act.
• The supply of goods to the SEZ, a Special Economic Zone or SEZ developer, comes under the GST exemption list.
• Supply of goods that come under the 0 GST items list means the tax rate of the goods fixed at 0% falls under the GST exemption list. These goods include fresh vegetables, fresh milk, and so on.

Here is a list of some commonly exempted goods under GST:

Also read: 3 Biggest Reasons Why GST is Good for the Country The above list of exempted goods is listed under GST rules but may be subject to change as the council suggests. Also, the above mentioned are examples of a few exempted goods, and more goods qualify for Nil GST. Note:

• All agriculture-related services, including harvesting, cultivation, supply, packaging, warehouse, renting or leasing machinery, etc., are exempted from GST. However, this does not include the rearing of horses• Transportation of individuals via public transport, metered cabs, auto-rickshaws, metro, etc.• Transport of agriculture produce and transportation of goods outside of India• Transportation of goods where the total amount of charges is less than Rs 1500• Government and foreign diplomatic services• Services provided by RBI or any foreign diplomatic mission in India are also exempt from GST• Services provided to diplomats including the United Nations• Certain healthcare and educational services are also exempt from GST such as mid-day meal catering services, services provided by a Vet, clinic, or paramedics. Services by ambulances and charities are also included in the list

Some of the other exemptions of services under GST exemption list Include:

• Services provided by tour guides to foreign tourist.• Library services• Services for conducting religious ceremonies• Distribution of electricity• Services by authorised sports organisations Note: The above list is a few examples of services exempted from GST, and there are more services that qualify for nil GST. The above list is also subject to timely change as per the rules of the GST council.

As a taxpayer, you can provide a consolidated report of items exempted from GST through sections 8A, 8B, 8C, and 8D, and title it Nil Rated Supplies in GSTR-1 returns.You should ideally report details of exempted outward supplies in Section 3.1 and title it “Tax on outward and reverse charge inward supplies.” Similarly, details of exempt GST inward supplies in Section 5, can be titled as “Exempt, nil and non-GST inward supplies” as part of the GSTR-3B return.Any credit applied on exempt supplies must be reversed using the below formula: Credit attributed to exempt supplies = Aggregate value of exempt supplies (for supplies other than taxable and zero-rated supplies) / Total taxpayer turnover in that tax period * Common Credit. Common credit will be total input credit reduced by tax attributable exclusively for non-business purposes, exempt supplies, taxable supplies, and ineligible credits as per regulations. Also read: Types Of GST Returns

Section 16 contains the regulations around the Input Tax Credit, which are the conditions to be fulfilled by taxpayers to claim GST Input Tax Credit (ITC). They are as follows:

• ITC can only be claimed if the goods or services purchased are used for business use and not personal use.
• The taxpayer claiming GST must have the invoice at the time of claiming ITC.
• The supplier should have filed the the details of supply of goods or services purchased by the taxpayer in Form GSTR-1, which reflect in the taxpayer's Form GSTR-2B.
• The receipt of goods or services by the taxpayer is completed. This means that the goods have been received or the services have been provided before claiming ITC.
• The last lot of the goods received in instalments has been received.
• Taxpayer has filed the GSTR-3B return.
• The payment has happened within 180 days of the invoice date. If not, the ITC has to be reversed.
• In the case of capital goods, ITC cannot be claimed when depreciation has been claimed.
• Common tax credit must be calculated and ITC on exempt supplies or nil-rates supplies but be reversed.

Also read: What is GSTIN? Understanding its Structure, Eligibility, and Benefits

In order to receive a GST refund , the taxpayer must go through a lengthy process and submit all necessary supporting documentation proof to the GST authorities. Examples against which a refund can be claimed include

• The cash balance in the electronic cash ledger that was deposited in excess
• The tax that was mistakenly paid, or
• The accrued Input Tax Credit (ITC) that couldn’t be used for tax payments because of zero-rated sales

Depending on the type of GST refund being requested, different forms are used to submit claims. For instance, it is only necessary to disclose information in GSTR-1 and GSTR-3B to request a refund of IGST paid on exports (with tax payment). While the form RFD-01 must be used to request a refund of any cash paid in excess of the electronic cash ledger. As a result, depending on the type of GST refund, the procedures or process vary.

GST is an indirect tax which is meant to tax the consumption of goods and services. Therefore, the consumer is always the one paying GST. Input Tax Credit or refund of GST cannot be claimed when the goods or services are used for personal use.

Any business can get a GST registration, but it is mandatory for businesses to get a GST registration if they cross a certain threshold of turnover. This threshold varies depending on the kind of business and the state where it is located.In India, the exemption limit for GST (Goods and Services Tax) varies based on the type of business and the state in which it operates.For businesses engaged in the supply of goods, the exemption limit is Rs. 40 lakhs turnover per annum, except for the following states and UTs:

• Arunachal Pradesh
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Uttarakhand
• Tripura

For businesses in these states, the exemption limit is Rs. 20 lakhs turnover per annum.Businesses engaged in the supply of services have an exemption limit of Rs. 20 lakhs turnover per annum, except for the following states and UTs:

• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Arunachal Pradesh
• Sikkim
• Uttarakhand
• Tripura

For businesses in these states, the exemption limit is Rs. 10 lakhs turnover per annum.If a business provides a 100% supply of exempt goods or services, they are not required to be registered for GST even if they cross the threshold limit.

In India, there are three types of GST exemptions you need to know about:

• Absolute Exemptions: These exemptions cover the entire amount without any conditions or restrictions. For instance, services provided by the RBI enjoy absolute exemption.
• Conditional Exemptions: These exemptions come with certain limits or conditions. For example, hotel services are partially exempt, subject to specific conditions.
• Partial Exemptions: If you, as an unregistered supplier, provide goods within the state to a registered person, you can be exempt from GST under reverse charge, but only if the total supply value stays below ₹ 5000 per day.