What is GST Exemption & List of Exempted Goods & Services Under GST

After July 1st, 2017, the Indian government established various requirements to be met before firms and individuals can register under the GST regulations.

Certain goods and services, however, may not be required to register for GST. Additionally, some supplies of products or services are subject to a tax rate of zero or exempt supply under the GST system.

To fully understand the details of the GST exemption, it's crucial to adhere to the GST exemption list.

In order to make clear what is excluded from GST and which services or goods are exempt from GST registration, we have written this article.

What does a GST exemption mean?

The meaning of a GST exemption is Understanding the taxability of goods and services also involves being aware of whether a particular product or service is excluded from GST registration. 

If candidates are aware of this, they could obtain insight into several other issues. In essence, a company's capacity to exempt itself from GST is determined by the sum of its annual revenues.

Previously, businesses with annual revenues up to Rs. 20 lacks were excluded from the GST registration requirements. 

For northeastern states and states with mountains, such as Meghalaya, Sikkim, Mizoram, Arunachal Pradesh, Nagaland, Himachal Pradesh, Manipur, Assam, Tripura, Uttarakhand, and Jammu & Kashmir, the sum was Rs. 10 lakhs.

The values for Micro, Small, and Medium-Sized Enterprises (MSMEs) in both scenarios have doubled, according to the GST Council meeting on January 10, 2019.

In addition, a variety of supplies of goods and services are not subject to GST registration. Let's utilise the next section to clarify this for us.

What exactly is a GST-exempt supply?

Three different supply categories are free from GST. Here are some of them:

• Supplies are subject to a zero per cent or no tax rate.
• Exemption from the CGST or SGST in full or in part for supplies.
• Providers are listed in Section 2 (78).

It should be noted that one must use a different input tax credit for these supplies.

Additionally, one must refer to the list below to comprehend the distinctions between nil-rated, zero-rated, exempt, and non-GST suppliers.

Types of GST exemptions

Here are the three categories of GST exemptions:

• Absolute: An exemption is one that is given without any conditions. Taking the RBI's services as an example.
  
• Conditional: A few exemptions are subject to a few restrictions. A conditional exemption applies to services provided by hotels, clubs, etc., with a declaration of lodging unit that costs less than Rs. 1000 per day.
  
• Reverse charge tax exemption is only available to unregistered individuals making intrastate supplies of products to a registered person, provided the total value of those supplies is at most Rs. 5000 per day.
  

Let's now enlarge the GST-exempt goods.

GST-exempt items list

Enterprises, individuals, and any other entities that offer goods, services, or supplies must register for GST if certain requirements are met. 

There are a few exceptions to this rule, though. You may discover a list of all the goods, companies, and taxpayers who qualify for tax exemptions under the Goods and Services Tax system in the section that follows.

Under GST, there is a negative list.

A negative list is a list of items that are not GST-eligible. In accordance with Schedule III of the CGST Act, these commodities are also notified. Items on the GST negative list include the following:

• Employer-provided services made by an employee while working for the company
• the provision of funeral, burial, crematorium, or mortuary services
• Land and finished structures for sale
• Suitable allegations (other than lottery, betting and gambling)
• Court or Tribunal services
• Tasks carried out by MLAs, MPs, and other officials.
• Duties carried out by any individual who holds a post in accordance with the Constitution's stipulations in that capacity.

Registration-free for GST

The following group of taxpayers is exempt from GST registration:

• Those who fall inside the threshold exemption level.
• Vendors of products and services who are exempt.
• An individual who offers non-GST products and services.
• Taxpayers who are involved in activities outside of the provision of goods or services.
• Agriculturists.
• Those who provide items are protected by reverse charge.

Small enterprises and startups are free from GST.

The newest GST legislation provides significant advantages to anybody who wants to launch a business. Here are some reminders on the GST exemption for start-ups.

• A firm is recognised as being GST-exempt if its annual revenue is less than Rs. 40 lakhs.
  
• Businesses may use a composition plan under GST if their total yearly revenue is less than Rs. 1.5 crores. The programme enables people to pay taxes at a set rate based on their income. The rate may range from 1% to 6%.
  
• Additionally, the GST exempts small enterprises from using electronic invoices. However, companies with a revenue of more than Rs. 50 crores are required to register for e-invoicing.
  
• Small firms can choose a quarterly reporting method if their annual revenue is less than Rs. 5 crores.
  

Therefore, it is clear that under this new tax system, small firms stand to gain a number of advantages.

GST-exempt products

You may find a list of the products in India that are not subject to GST in the section below:

• Fresh and dry veggies, including potatoes, onions, and other legumes.
• Products like fish, eggs, fresh milk, and others are exempt from GST.
• Melons, grapes, ginger, garlic, raw green tea leaves, unroasted coffee beans, and more.
• Food products that are not packaged in branded containers, such as blood, such as rice, hulled cereal grains, wheat, corn, etc.
• Unspun jute fibre, unprocessed silk, khadi fibre, etc.
• Components for making hearing aids, chalk, slates, handlooms, etc.

Services from the GST exemption

Services that are excluded from GST include a variety. As a guide, the following services are excluded from GST:

• Agriculture-related services, such as harvesting, packing, warehouse storage, cultivation, supply, and machinery leasing, are fundamentally excluded from the GST. Horse raising falls within the category of exempt services.
  
• Autorickshaws, metered cabs, the metro, and other forms of public transit.
  
• International shipping of commodities and agricultural produce.
  
• Farm labour is available.
  
• A shipment of goods for which the cost is less than Rs. 1500.
  
• Such as retail packaging, preconditioning, waxing, etc.
  
• Services provided by foreign governments and diplomats.
  
• Services in the fields of health and education include paramedics, VET clinics, and catering for midday meals. Services like ambulances and charitable organisations are also free from GST.
  
• Providers of services include the RBI, IRDAI, the federal and state governments, NPS, and others.
  
  
• Under the Pradhan Mantri Jan-Dhan Yojana, banking services such as Basic Savings Bank Deposit (BSBD) accounts are available (PMJDY).
  
  
• Additionally, the GST exempts from payment services provided for religious events, athletic organisations, tour guides, and libraries.
  

However, one can question why certain products and services are exempt from GST registration. The explanations for the exemptions should also be known.

Exemptions from GST listed by EPFO, IRDA, and SEBI

• Employees Provident Fund Organization (EPFO) services offered to those covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
• Under the Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999), the Insurance Regulatory and Development Authority of India (IRDA) provides services to insurers;
• Services offered by the Securities and Exchange Board of India (SEBI), which was established by the Securities and Exchange Board of India Act, 1992 (15 of 1992), to safeguard the interests of investors in securities and to encourage the growth and regulation of the securities market;
• through the spread of cold chain information, the National Center for Cold Chain Development, an agency of the Ministry of Agriculture, Cooperation, and Farmer's Welfare, provides services;
• services, including the air delivery of products from outside India to an Indian customs post for clearance.
• Services rendered by one local authority or government to another:
• Services are given by the government or local authority in the form of birth certificates, death certificates, driving licences, passports, and visas.
• Services offered by the government or local authority in exchange for tolerating non-performance of a contract for which payment is due to the government or local authority in the form of penalties or liquidated damages;
• Services offered by the government or local authority in the form of granting a landowner the right to use natural resources for the cultivation of plants and the raising of all other animal life forms, excluding horses, to produce food, fibre, fuel, raw materials, or other similar products;
• services provided by the government, a local authority, or any governmental body in connection with any activity related to any task assigned to a panchayat;

Reasons for GST exemption

In the following situations, the government decides to exclude products from GST registration:

• If the GST Council advises against the exception.
• According to the government, certain exclusions from GST registration may benefit the general public.
• The government may issue an exception by special order if unusual or unanticipated circumstances exist.
• Specific items may be supplied under a complete exemption after formal notification.

Therefore, it is clear from the considerations mentioned above that various industries may be eligible for a GST exemption as long as they meet certain requirements. 

An individual taxpayer can register for GST without any hassles by thoroughly understanding those requirements.

Read more,

GST Registration Procedure

GST Services

GST Registration Online

Conclusion

An important component of the Indian indirect tax system is the list of GST exemptions, to sum up. 

However, some items and services are still exempt from this tax, despite the fact that GST has made indirect taxes simpler to comprehend and pay. 

It's crucial to keep up with the most recent updates to this list because of this.

This blog's main message is that consumers and companies must be aware of the GST exemptions list. 

Being aware of the changes is crucial to ensuring compliance since this information significantly influences how much products and services cost. 

Understanding the exemptions can help firms and customers make wise judgements and educated purchases.

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Let us give you the trustworthy financial information you need to make wise business decisions. 

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FAQs Related to List of Exempted Goods & Services Under GST

1. When does the GST exemption take effect?

GST exemption is available starting on the day it is announced.

2. When delivering items that are GST-exempt, is a tax invoice required?

When a company provides products and services that are exempt from GST, a bill of supply must be produced instead of a tax invoice.

3. Do exempt supplies appear separately in the GSTR-1 return?

The preparation of a GSTR-1 return does need the distinct recording of nil rates, GST exempt, and non-GST suppliers.

4. Who is eligible to provide GST exemptions?

The government may provide exemptions from the GST. After receiving advice from the GST Council, the government issues a notification announcing the exception.