Exempted Services Under GST

MEANING:

Exempt supplies mean they are not liable to GST. They comprise the following three types of supplies:

  • Supplies taxable at a ‘NIL’ i.e.  0% tax;
  • Supplies that are wholly or partially exempted  by way of a notification amending Section 11 of CGST Act or Section 6 of IGST Act;
  • Non-taxable supplies as defined under Section 2(78).

E.g. Alcoholic liquor for human consumption, not within the purview of GST. Tax need not be paid on these supplies. ITC attributable to exempt supplies will not be available for utilization. Zero rated supplies such as exports would not be treated as supplies taxable at ‘NIL’ rate of tax. Central Governments or the State Governments are empowered to grant exemptions from GST.

EXEMPTION ARE GRANTED ON THESE GROUNDS:

  1. The exemption should be in the public interest
  2. By way of issue of notification
  3. Must be recommended by the GST Council
  4. Absolute exemption 

Ex: Transmission or distribution of electricity by an electricity transmission or distribution utility, Services by RBI.

  1. Conditional exemption may be for any specified description.

Ex: Services by a hotel, inn, guest house, club by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation less than ` 1000/- per day.

Intra-State supplies 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 ` 5000/- in a day.

  1. Exemption by way of a special order may be granted exceptional circumstances.
  2. A registered person supplying the services and/or services is not entitled to collect tax higher than the effective rate, where the supply enjoys an absolute exemption.
  3. Exemption under one GST Law and the effect on another GST Law

Note: GST Exemption allowed in the case of inter-State transactions is not the same as the GST.

Exemption under CGST ActDeemed to be exempt under the SGST / UTGST Act
No auto-application of exemption under the IGST Act
Exemption under IGST ActNo auto-application of exemption under the CGST Act

 LIST OF EXEMPTED SERVICES UNDER GST 

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