The rules regarding GST rates are liable to change over time. For instance, in July 2022, the GST rates for various categories of goods, including food grains and dairy products, were amended.
In light of this, it is a good idea to keep abreast of the GST rates of various categories of products and services. In addition, it is also important to know what kinds of products and services are exempt from GST, and if there are any conditions attached to such exemptions.
There are three main types of GST exemptions in India:
Absolute exemptions: Unconditional exemptions are said to be absolute exemptions. For instance, the services provided by the RBI are not subject to GST.
Conditional exemptions: As the name suggests, these are exemptions that have some conditions attached to them. For instance, the services provided by hotels may be exempted from GST if they can provide proof that their daily revenue through providing accommodation is less than a certain amount.
Partial exemptions: If a registered person receives an intra-state supply of goods and/or services from an unregistered person, then such goods and/or services are exempted from GST under reverse charge, as long as the aggregate value of such supplies does not exceed a certain daily amount.
Supplies may be exempted from GST by virtue of falling in one of the following three categories:
Supplies that are taxable at a NIL rate of tax (i.e. at a tax rate of 0%)
Supplies that are either partly or wholly exempted from IGST (Integrated Goods and Services Tax) or CGST (Central Goods And Services Tax) due to an amendment to Section 11 of the CGST Act or Section 6 of the IGST Act
“Non-taxable supplies”, as defined under Section 2(78) of the CGST Act (such as alcohol meant for human consumption)
Note that supplies taxable at a NIL rate are not the same as “zero-rated supplies”; the latter are treated differently from the former for legal purposes.
The differences between ‘exempt’, ‘nil-rated’, ‘zero-rated’, and ‘non-GST’ supplies are important to understand. They are differentiated clearly in the table below:
Type of Supply
This kind of supply is taxable, but GST is not applicable to them. Moreover, Input Credit Tax (ITC) cannot be claimed for them.
Supplies whose GST rate is set at 0%. E.g. salt and grains.
Export supplies, and goods and/or services provided to SEZ’s or SEZ developers.
Supplies that do not fall under the scope of GST laws. E.g. alcohol for human consumption.
Businesses and individuals are required to register for GST if they meet certain criteria. However, there are quite a few exceptions to this requirement. Here is a list of the various kinds of goods, services, and businesses that are subject to exemptions under the GST regime.
Here are some of the goods that are exempted from GST.
Fresh and dry vegetables
Non-GST goods, such as fish, egg, fresh milk, etc.
Grapes, melons, ginger, garlic, unroasted coffee beans, green tea leaves that are not processed, etc.
Food items that are not put into branded containers, like rice and other food grains
Substances like human blood
Unspun jute fibres, raw silk, khadi fibre, etc.
Here are some of the services that are exempted from GST.
Agricultural services, such as harvesting, packaging, warehouse, cultivation, supply, leasing of machinery, etc.
Public transportation services
Transportation of agricultural products and goods outside of India
Labour supply for farms
Goods transportation where the charges are less than Rs.1500
Retail packing, pre-conditioning, waxing, etc.
Healthcare and educational services
Services offered by the RBI, the IRDAI, the Central and State Governments, the NPS, etc.
Various banking services
Here are some of the categories of taxpayers who do not need to register for GST.
Individuals who fall under the GST exemption limit
Suppliers of exempted goods and services under GST
Persons providing non-GST goods and services
Taxpayers who do not supply goods or services
Persons who supply goods covered under reverse charges
Here are two kinds of start-ups and businesses that are exempted from GST.
Businesses with a turnover of less than Rs. 40 Lakhs
Small businesses are exempted from e-invoicing under GST.
A “non-taxable supply” refers to a supply of goods and/or services which may not be taxed under the CGST Act or IGST Act. It should be noted that only those transactions that are ‘supplies’ as defined under GST law qualify as non-taxable supplies with respect to GST.
In other words, a non-taxable supply is a kind of supply that is excluded from the purview of GST.
Goods and services that are not covered under GST make up what is known as the “negative list” under GST. Some of the items on this list are:
Services provided by an employee to their employer
Sales of completed buildings
Services by courts and tribunals
Duties performed by MPs, MLAs etc.
Thus, there are several different kinds of goods and services that are exempted from GST. Moreover, there are different types of GST exemptions as well: some absolute, some conditional.
Sellers of goods with a turnover of less than 40 Lakhs (20 Lakhs for special category states), and providers of services with a turnover of less than 20 Lakhs (10 Lakhs for special category states) are exempt from having to register for GST.
No, sellers of exempt goods can issue a Bill of Supply instead.
Input Tax Credit (ITC) can be availed only on goods and services used for business purposes. However, ITC cannot be claimed on the portion of goods and services used for making exempt supplies.
Yes, as there is a correlation between the CGST and SGST Acts.
No, there is no correlation between the IGST and CGST Acts.