Thank you for your response
Thank you for your response
Our representative will get in touch with you shortly.
Understanding the taxability also involves knowing whether the item is exempt or not under GST. Due to the scope of taxable supplies being widened under GST, exemptions under GST have clearly been defined. Not just knowing the exemption list, but also understanding the implication of an item being exempt is important as certain conditions are attached to it like reversing the ITC.
Also, what can be nil rated today may become charged a higher tax rate in the future. Hence, clearly demarking the various terms such as Nil Rated, Exempt, Zero-rated and Non-GST supplies under GST is important. Read through and get the complete list of all the GST exemptions notified on Goods at a click of a button!.
Also, click here to view the complete list of exempted services under GST.
Exempt supplies comprise the following three types of supplies:
Tax need not be paid on these supplies. Input tax credit attributable to exempt supplies will not be available for utilization/setoff.
*Zero-rated supplies such as exports would not be treated as supplies taxable at ‘NIL’ rate of tax;
Central or the State Governments are empowered to grant exemptions from GST. The conditions for granting an exemption are:
Supplier may be exempt – Exemption to the person making supplies – .i.e, supplier, regardless of the nature of outward supply.
Ex: Services by Securities and Exchange Board of India, Services by Charitable entities.
Certain Supplies may be exempt – Certain supplies due to their nature and type are exempted from GST. All supplies that are notified would be eligible for the exemption. Here, irrespective of who the supplier is, the exemption is allowed. not very much relevant.
Ex: Services by way of sponsorship of sporting events, Services by way of public conveniences.
Absolute exemption: Exemption without any conditions.
Ex: Transmission or distribution of electricity by an electricity transmission or distribution utility, Services by Reserve Bank of India.
Conditional Exemption: Exemption subject to certain conditions.
Ex: Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation less than ` Rs 000/- per day”.
Conditional or partial exemption: Intra-State supplies of goods and/or services received from an unregistered person by a registered person is exempted from payment of tax under reverse charge provided the aggregate value of such supplies received by a registered person from all or any of the suppliers does not exceed `Rs 5000/- in a day.
|Exemption under CGST Act||Deemed to be exempt under SGST / UTGST Act|
|No auto-application of exemption under IGST Act|
|Exemption under IGST Act||No auto-application of exemption under CGST Act|
|02/2017 Central Tax (Rate) dated 28.06.2017||Exempted supplies of around 149 items of goods in terms of Section 11(1) of the CGST Act, 2017. Ex. Electricity, Salt, fresh fruits, plastic bangles, passenger baggage etc. Amended vide Notification No.28/2017, 35/2017,42/2017, 7/2018, 19/2018 – Central Tax (Rate)|
|12/2017 Central Tax (Rate) dated 28.06.2017||Exemption to supply specified services under the CGST Act. More or less, all the exemptions were available earlier under the erstwhile service tax law Amended vide Notification No.21/2017, 25/2017, 32/2017 and 47/2017, 2/2018 – Central Tax (Rate)|
Click here to view the complete list of exempted goods.
In the case of exempt supplies, the amount of credit attributable to exempt supplies shall be reversed.
Credit attributable to exempt supplies = (A/T) x C
A = Aggregate value of exempt supplies (all supplies other than taxable and zero-rated supplies)
T = Total turnover of the person in the tax period
C= Common Credit
|Common Credit||Total input tax in a period|
|Less:||Tax attributable exclusively for the non-business purpose|
|Less:||Tax attributable exclusively for exempt supplies|
|Less:||Ineligible credits as per Section 17(5) Works contract, Rent a cab etc.|
|Less:||Tax attributable exclusively for taxable supplies (including zero-rated supplies)|
“Non-taxable supply” means a supply of goods or services or both which is not leviable to tax under the CGST Act or under the IGST Act. A transaction must be a ‘supply’ as defined under the GST law to qualify as a non-taxable supply under the GST.
Note: Only those supplies that are excluded from the scope of taxation under GST are covered by this definition – i.e., alcoholic liquor for human consumption, articles listed in section 9(2) or in schedule III.
It must also be noted that the following items are not out of the scope of GST. However, the GST rate has not yet been announced or notified to them.
Items that are not covered under GST are called a negative list. Also, these items are notified under Schedule III of the CGST Act. The following items are on the negative list under GST:
Supplies are taxable but do not attract GST and for which ITC cannot be claimed.
Example: Fresh milk, Fresh fruits, Curd, Bread etc.
|Zero-Rated||Exports Supplies made to SEZ or SEZ Developers.|
|Nil Rated||Supplies that have a declared rate of 0% GST. |
Example: Salt, grains, jaggery etc.
|Non-GST||These supplies do not come under the purview of GST law. |
Example: Alcohol for human consumption, Petrol etc.
Only Government has the power to grant the exemption. On the recommendations of the GST Council, the Government by notification may grant exemption from tax.
Exemption notifications will apply from the effective date as specified in the notification.
There is no requirement for registration under GST if a person is dealing with 100% exempt supplies.
GST registration is mandatory for every person doing business in India. However, you don’t have to register under GST when you are
The supply of exempt goods is considered non-taxable. Hence, such supplies do not trigger Registration, claim for input tax credit and other relevant provisions.
A bill of supply should be issued when a registered dealer supplies exempt goods or services. For example, when a registered taxpayer supplies handloom, they have to issue a Bill of Supply instead of a tax invoice.
Petrol is non-taxable good since it is excluded from the levy of tax for the time being.
Not required to be generated. As per provisions of rule 138 (14) of CGST Rules, an e-way bill is not required to be generated when goods specified in notification no. 2/2017-Central Tax (Rate) dated 28.06.2017 other than de-oiled cake, is being transported. And, basically, goods specified in notification no. 2/2017-Central Tax are exempt goods.
Yes. Taxpayers should report consolidated details of nil rated, exempted and non-GST outward supplies in the tile “8A, 8B, 8C, 8D – Nil Rated Supplies”
Yes. Taxpayers should report details of nil rated and exempted outward supplies in Section “3.1 Tax on outward and reverse charge inward supplies” and the details of exempt, nil and Non-GST inward supplies in Section “5. Exempt, nil and Non-GST inward supplies”.
In this case, the taxpayer will be entitled as follows:
Yes. Taxpayers should report co In case of switchover from taxable to exempt transactions, an amount equal to the credit of tax paid on stock held (inputs, semi-finished goods or finished goods) and capital goods (reduced by percentage points) on the day preceding the date of effecting exempt supplies will have to be paid.
In other words, the input tax credit is fully restricted. However, the taxpayer has the option to pay the same by utilization of available credit.
No. A taxpayer is not eligible to claim the tax paid on capital goods used for both, taxable and exempt supply
Yes, notification issued under section 11(1) or 11(2) of the CGST Act will be deemed to be issued under the SGST Act / UTGST Act.
There are no such correlated sections between the two Acts. Hence an exemption from IGST does not automatically apply as an exemption from CGST
As per section 17(3) read with explanation (2) in rule 45, ‘Exempt Supplies’ for the purpose of input tax credit means all supplies other than taxable and zero-rated supplies and specifically include the following:
a. Supplies liable to tax under reverse charge mechanism
b. Transactions in securities
c. Sale of land
d. Sale of building
You can use ClearTax HSN Code List & GST Rate Finder to get the applicable GST rate.