Goods Exempted Under GST
EXEMPTIONS UNDER GOODS AND SERVICE TAX (GST): Exemption under GST means relaxation to pay tax sec (11) by the central government on the Recommendation of the GST council.
Such exemption may be a general exemption or exemption by special order.
The exemptions is subject to the following conditions:
• Public interest
• Recommendation of the Gst council
• Issue of notification
• Absolute or conditional on goods and services or both
General Exemption Sec 11(1)
• General exemption is always granted by way of notification.
• It is goods or service specific.
• In general exemption any supplier supplying these notified goods or services can enjoy the exemption.
• It may be absolute or conditional if absolute then the supplier has to avail it and he can collect tax only at effective rates.
• General exemption is may be partial or total.
Exemption By Special Order Sec 11(2)
• This exemption is granted on special order
• ESO is a person’s and purpose specific
• In this the goods are generally chargeable but exempted in special circumstances and hence such exemption is not enjoyed by all.
What Are the Exempted Goods?
• Live animals
• Fish and other Aquatic invertebrates
• Dairy products, eggs, natural honey, etc
• Fresh ginger, garlic, grapes, melon, unroasted coffee beans, unprocessed green tea leaves, etc.
• Corn, rice, wheat, maize, soya bean, hulled cereal grains, etc. not put into branded containers.
• Live trees, plants, fruits, flowers, vegetables, nuts, roots, salt, beverages, pharmaceutical products, plastic article, rubber, wood paper, books, silk, wool, cotton, ceramic products, glass, tools, aircraft, musical instrument, sugar cane, Prasad and Niyaz, national flag, etc.
What Are the Exempted Services?
• Service by an organisation registered under sec 12(AA) of income tax Act
• Service relating to municipal or panchayat function
• Service by any government organization.
• Renting services
• Transport of passenger goods hire/toll/loading etc related to transport
• Insurance or provident fund
• Insurance business and pension
• Facilitator or intermediary services
• Arbitration or legal services
• Services related to agriculture
• Service of foreign diplomatic mission
• Health care services
• Services of entertainment and sports
• Educational services etc
• Transportation of goods outside of India, services related to the transport of agricultural produce, milk, salt, rice, etc.
• Various Services provided by the Reserve Bank of India, IRDAI, central government, state government, NPS, etc.
• Banking services on Basic Saving Bank Deposit (BSBD) account opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
• Services provided by the veterinary clinic with respect to the healthcare of animals/birds.
• Services by an artist through performance in classical or folk art forms of music, dance, theatre, etc.
Some Special Points to be Kept in Mind
• Exemption from CGST means automatically exemption from SGST
• Exemption from IGST on domestic supply does not means exemption from CGST and SGST
• Exemption from IGST on domestic inter-state supply means exemption from IGST on imports
• Exemption must make a reference to the HSN code along with the description of the goods to be exempted
• Violation of condition withdraw the exemption
• Exemption is different from exclusion from GST
• Exempt supply means
1. Supply with nil rate of tax
2. Fully exempt from tax
3. Non-taxable supply and zero-rated supply that is export and supply to special economic zone (sez).
4. Exempted goods are not the same as non-taxable goods
5. Alchohol and five petroleum products petroleum crude, high diesel motor spirit, natural gas, and aviation turbine fuel are non-taxable goods
GST Exemption Based on Aggregate Turnover
The GST Act defines “aggregate turnover” as the aggregate value of all taxable supplies excluding charges paid on reverse charge mechanism RCM, exempt supplies, inter-state supply of goods as well as all goods and services exported.
There are a few exclusions when calculating the aggregate turnover of businesses. These are as follows :
• Any IGST, CGST, or SGST paid by the investor.
• Value of inward supplies of goods and services
• Taxes payable on the basis of the reverse charge mechanism.
• Value of non-taxable supplies of goods/services.
According to the new amendment, now those businesses whose turnover is more than Rs. 40 lakh rupees are required to register under GST, and below 40 lakh rupees, your business is exempted. The threshold for Registration for service providers would continue to be Rs. 20 lacks. And in the case of the Special category states Rs. 10 lacks.
The exempted limit is 20 lakh in some states and states have the option to decide on the limit of exemption.
Note: “This document had been written to provide an update in simple/ lucid language. The Author shall not be responsible for any decision made based on the content of this document. Care has been taken to produce authentic and reliable information, however the users are expected to obtain professional advice before implementing.