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Exemptions Under GST – Goods & Services Exemptions List

Nil Rated, Exempt, Zero Rated and Non-GST supplies – There are many kinds of exemptions under the GST Act. GST lists out a number of goods & services that are exempted under GST. These products are taxed differently or are completely exempted from tax, depending on the nature of their end-use. Business owners have to learn this list of exempted and nil rated commodities so that they can raise their GST taxation accordingly.

The GST Council regularly updates this list of goods & services, changes their taxation status and so on, so taxpayers have to be on top of it to avoid penalties and incorrect filing of returns.

What Is A GST Exemption?

Businesses with an annual revenue of up to Rs.40 lakhs are exempt from GST registration. Meghalaya, Sikkim, Mizoram, Arunachal Pradesh, Nagaland, Himachal Pradesh, Manipur, Assam, Tripura, Uttarakhand, and Jammu & Kashmir get a limit of Rs.20 lakhs.

Additionally, many supplies of goods and services are exempt from GST registration. Let's look at the next section to get a better understanding of this.

There are three sorts of supplies that are exempt from GST. These are their names:

  • Supplies subject to a 'NIL' rate of tax (0 per cent tax)
  • Supplies entirely or partially exempt from CGST or IGST as a result of a notification modifying Section 11 of the CGST Act or Section 6 of the IGST Act
  • Non-taxable supplies, as defined in Section 2(78), are those that are not taxable under the Act (for example, alcoholic liquor for human consumption)

The input tax credit attributable to these supplies cannot be used. In addition, to comprehend the distinctions between nil-rated, zero-rated, exempt, and non-GST supplies, refer to the list below.

SuppliesDefinition
Nil-ratedSupplies subject to a 0% tax rate. Salt is the primary example.
Non-GSTAlcohol for human consumption is one that does not fall under the jurisdiction of GST law.
Zero-ratedSupplies are exported to SEZ (Special Economic Zone) developers.
ExemptTaxable supplies that are not subject to GST. Among the supplies are curd and grapes.

These supplies are exempt from taxation. Input tax credits related to exempt supplies will not be available for use or set off. Zero-rated supplies, such as exports, would not be classified as supplies taxable at the 'NIL' rate of tax; the Central or State Governments have the authority to award GST exemptions.

Types of GST Exemptions

The three forms of GST exemptions are listed below:

Absolute exemptions are those that do not have any conditions attached to them. For example, the RBI's services.

Conditional: Some exemptions are subject to certain criteria. A conditional exemption applies to services provided by hotels, clubs, and other similar establishments with a statement of accommodation unit less than Rs.1000 per day.

Partial: Unregistered persons supplying products within states (intrastate) to a registered individual can enjoy reverse charge tax exemption only if the aggregate amount of a supply does not exceed Rs.5000 per day.

List Of GST Exemption

GST registration is required for goods, services, suppliers, businesses, and persons who meet specified criteria. There are, however, a few exceptions. In the section that follows, you will discover a list of all the items, businesses, and taxpayers who are eligible for tax exemption under the Goods and Services Tax regime.

Exemption From GST Registration

The following taxpayers are exempt from registering under GST:

  • Individuals who fall within the exemption limit
  • Suppliers of goods and services are exempt
  • A person who provides non-GST goods and services
  • Taxpayers who are engaged in activities other than the provision of goods or services
  • Agriculturists
  • Those who supply things that are subject to reverse charge

GST Exemption For Start-Ups And Small Businesses

  • Individuals looking to start a business can benefit substantially from the revised GST legislation. Here are a few things to bear in mind when it comes to GST exemption for new businesses.
  • A GST-exempt business is defined as one having a turnover of less than Rs.40 lakhs.
  • Businesses with a yearly aggregate revenue of less than Rs.1.5 crores are eligible for the GST composition plan. Individuals can pay taxes at a fixed rate based on their turnover amount under the plan. The rate might range from 1% to 6%.
  • Small enterprises are also exempt from e-invoicing under GST. Businesses with a turnover of more than Rs.50 crores, on the other hand, are required to apply for e-invoicing.
  • A quarterly filing procedure is suitable for small enterprises with an annual revenue of less than Rs.5 crore.
  • As a result, it is clear that small firms will gain from this new tax plan in a variety of ways.

Goods Exempt From GST

The following section is a list of GST-exempted commodities in India:

  • Potatoes, onions, and other leguminous vegetables, both fresh and dry.
  • Non-GST commodities include fish, eggs, and fresh milk.
  • Grapes, melons, ginger, garlic, unroasted coffee beans, unprocessed green tea leaves, and more
  • Food items that are not packaged in branded containers, such as rice, hulled cereal grains, wheat, corn, and so on.
  • Components such as human blood
  • Unspun jute fibres, raw silk, khadi fibre, and so on.
  • Parts for hearing aids, chalks, slates, handlooms, and so forth.

Please keep in mind that certain non-GST items will be subject to GST once processed.

Exempted Services Under GST

A number of services are excluded from GST -

  • Harvesting, packaging, warehouse, cultivation, supply, and leasing of machinery are all examples of GST-exempt agricultural services. Horse raising is an exception to these exempted services.
  • Public transportation, auto-rickshaws, metered cabs, metro, and so on.
  • Transportation of agricultural produce and goods from India to other countries.
  • Farm labour is available.
  • Transportation of goods for a fee of less than Rs.1500.
  • Retail packing, pre-conditioning, waxing, and other services
  • Diplomatic and government services on a global scale.
  • Healthcare and educational services such as mid-day meal catering, VET clinics, paramedics, and so on are available. Ambulance and charitable services are likewise free from GST.
  • RBI, IRDAI, Central and State Governments, NPS, and others provide services.
  • Banking services, such as Basic Saving Bank Deposit (BSBD) accounts, are available through the Pradhan Mantri Jan-Dhan Yojana (PMJDY).
  • Furthermore, GST exempts services associated with religious events, sports organizations, tour guides, and libraries.

Why Are Exemptions Important Under GST?

Various industries and enterprises can qualify for a GST exemption if certain conditions are met. Knowing those conditions in depth will enable a taxpayer to register for GST without difficulty -

  • In the event that the GST council recommends the exemption.
  • Certain exemptions from GST registration may be beneficial to the public, according to the government.
  • In rare or unexpected circumstances, the government may provide exemption by special order.
  • Specific items can be supplied under a full exemption after providing official notification.

FAQs

1. What is the GST exemption limit?

The GST Council has set the GST Exemption Limit from payment of goods and services tax (GST) at Rs 40 lakh. It used to be Rs. 20 lakhs previously. In addition, the exemption ceiling for the north-eastern states has been raised to Rs 20 lakh from Rs 10 lakh previously.

2. Are petroleum products under GST?

The GST Council has made no recommendation so far to include petroleum products, including petrol, natural gas and aviation turbine fuel (ATF) under the GST. The inclusion of petroleum products will require the recommendation of the GST Council.

3. Is it possible to issue an invoice without including GST?

Only registered businesses are required to file e-invoices for goods and services tax on purchases and sales. Individuals, on the other hand, can send official invoices to a registered person or business without registering for GST.

4. Is it permissible to issue a handwritten bill under GST?

On the invoice, you can include a handwritten GST number. Refer to Rule 46 of the CGST Rule, which, when read with Rule 48 of the CGST Rule, does not state that the GSTIN Number must be pre-printed on invoices.

5. Is it possible to register on the GST portal by myself?

Yes, the GST portal is very user-friendly and business owners can easily register by themselves. Just remember to read the list of documents required and keep them handy before you start the registration process.

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