GST Exemptions

Exempt, Nil Rated, Zero Rated and Non-GST supplies

In the context of the Goods and Services Tax (GST) system in India,
there are several categories that describe different tax treatments for
supplies (goods and services).
These categories include "Exempt," "Nil Rated," "Zero Rated," and
"Non-GST Supplies." Each category has distinct implications for the
applicability of GST. Here's a breakdown of the differences between
these categories:

Exempt Supplies:

GST Applicability: Exempt supplies are not subject to GST. This

means that no GST is charged on the value of the supply, and the
supplier cannot claim input tax credit (ITC) for the GST paid on
inputs and services used to provide the exempt supply.
Examples: Certain essential goods and services, such as fresh fruits,
vegetables, milk, and healthcare services provided by a clinical
establishment, are typically exempt from GST.

Nil Rated Supplies:

GST Applicability: Nil rated supplies are also not subject to GST, but
they differ from exempt supplies in that they are specifically taxed at
a GST rate of 0%. Nil-rated supplies do not attract any GST liability
on the part of the supplier, but the supplier can claim input tax credit
on GST paid for inputs and services.
Examples: Exports of goods and services, such as pharmaceuticals
and certain agricultural products, are often classified as nil-rated
supplies.
Zero Rated Supplies:

GST Applicability: Zero-rated supplies are similar to nil-rated

supplies in that they are taxed at a GST rate of 0%. However, zero-
rated supplies specifically refer to exports of goods and services.
Suppliers of zero-rated supplies can claim input tax credit on GST
paid for inputs and services.
Examples: Exports of goods and services to foreign countries are
considered zero-rated supplies under GST.

Non-GST Supplies:

GST Applicability: Non-GST supplies are not subject to GST because

they fall outside the scope of GST altogether. These supplies do not
involve the levy or collection of GST, and no input tax credit is
available.
Examples: Items or transactions that are not covered by GST, such as
petroleum products (which are subject to separate state taxes), alcohol
for human consumption, and some specified goods like stamps and
currency, are considered non-GST supplies.

The key distinctions between these categories lie in the tax rate and
the ability to claim input tax credit:

● Exempt supplies are not subject to GST, and ITC cannot be

claimed.
● Nil rated supplies are taxed at a GST rate of 0%, and ITC can be
claimed.
● Zero-rated supplies refer specifically to exports and are taxed at
a GST rate of 0%, with ITC claimable.
● Non-GST supplies are entirely outside the scope of GST, and no
GST is levied or collected, nor can ITC be claimed.
List of exempted goods under GST in India:

● Food
Cereals, edible fruits and vegetables (not frozen or processed), edible
roots and tubers, fish and meat (not packaged or processed), tender
coconut, jaggery, tea leaves (not processed), coffee beans (not
roasted), seeds, ginger, turmeric, betel leaves, papad, flour, curd, lassi,
buttermilk, milk, and aquatic feeds, and supplements.

● Raw materials
Raw silk, silk waste, wool (not processed), khadi fabric, cotton used
for khadi yarn, raw jute fiber, firewood, charcoal, and handloom
fabrics.

● Tools/Instruments
Hearing aids, hand tools (such as spades and shovels), tools used for
agricultural purposes, handmade musical instruments, and aids and
implements used by physically challenged people.

● Miscellaneous
Books, maps, newspapers, journals, non-judicial stamps, postal items,
live animals (except horses), beehives, human blood, semen, bangles,
chalk sticks, contraceptives, earthen pots, props used in pooja
(including idols, bindi, kumkum), kites, organic manure, and
vaccines.

List of exempted services under GST in India:

● Agricultural services
This includes all services related to agriculture except the rearing of
horses. Exempt services include cultivation, harvesting, supply of
farm labor, fumigation, packaging, renting or leasing of machinery for
agricultural purposes, warehouse activities, and services by an
Agricultural Produce Marketing Committee or Board that is provided
by an agent for the sale or purchase of agricultural produce.

Transportation services
 ● Transportation service by road or bridge on payment of toll;
transportation of goods by road (except when carried out by
transportation agency or courier agency).
● Transportation of goods by inland waterways.
● Transportation of passengers by air (in the states of Manipur,
Meghalaya, Assam, Arunachal Pradesh, Nagaland, Sikkim,
Tripura, and Bagdogra).
● Transportation by non-AC horse or contract carriages;
transportation of agricultural produce, milk, salt, newspapers, or
woodgrains.
● Transportation of goods where the gross amount charged is less
than Rs. 1500.
● Hiring services provided to any state transport undertaking,
including motor vehicles with a capacity to carry more than 12
passengers; services provided to goods transport agencies.

Services provided by the government and diplomatic missionaries

● Services by any foreign diplomatic mission located in India.

● Services provided by the Reserve Bank of India.
● Services by the Government or any local authority except the
following services:
● Services by the Department of Posts via speed post, express
parcel post, life insurance, and agency services provided to any
individual other than the government.
● Services related to an aircraft/vessel within or beyond the
boundaries of a port or airport.
● Transportation of goods or passengers.
● Any other service, except those that come under (a) and (b), that
is provided to business entities.
● Services provided to diplomats, including the United Nations.

● Life insurance services provided under the National Pension

System; life insurance provided by the Army, Naval and Air
Force Groups.
 Judicial services

● Services provided by an arbitral tribunal (i.e., services provided

by the court or a judge) to any individual other than a business
entity or to a business entity with a turnover up to Rs. 20 lakhs
(Rs. 10 lakhs for special category states) in the preceding
financial year.
● Services provided by a partnership firm of advocate(s) to: an
advocate or partnership firm of advocates, any individual that is
not a business entity, or a business entity with a turnover up to
Rs. 20 lakhs (Rs. 10 lakhs for special category states) in the
preceding financial year.
● Services provided by a senior advocate (legal services) to any
individual other than a business entity or to a business entity
with a turnover up to Rs. 20 lakhs (Rs. 10 lakhs for special
category states) in the preceding financial year.

Educational services
● Transportation of students and faculty, mid-day meal catering
services, admission, examination services, and security and
housekeeping services.
● Services provided by Indian Institutes of Management (except
the Executive Development Programme).
● Coaching services provided by institutions and NGOs under the
central sector scheme of ‘Scholarships for students with
Disabilities’.

Medical services
● Services provided by a veterinary clinic; health-care services
provided by clinics or paramedics.
● Services provided by ambulances, charities, and organizations
facilitating religious pilgrimage.

● Services provided by organizers

● Services provided by organizers for business exhibitions held
outside India.
● Services provided by tour operators to foreign tourists (this
includes tours that are conducted completely outside India).

Miscellaneous services

● Transmission or distribution of electricity by authorized

personnel.
● Services provided by recognized sports bodies.
● Services provided by journalists, Press Trust of India, or United
News of India. This includes the collection and provision of
news.
● Services provided by slaughterhouses.
● Services provided by libraries.
● Services provided for public conveniences, such as washrooms,
lavatories, urinals, and toilets.
● Renting out vehicles by State Transport Undertakings and Local
Authorities.
● Overloading charges at a toll plaza.
● Services provided for conducting religious ceremonies,
including renting the premises of any religious place.
● New exemptions that have been added:
● Services provided by the GSTN to the Central government,
State government, and Union Territories.
● The back office sector will no longer have GST. Services
outsourced to India or services carried on in India on behalf of
foreign entities will not have 18% GST.
● Services related to renting property for residential purposes and
renting rooms with charges less than Rs. 1000 per day.
● The IGST exemption for imports on lease (where GST is paid
on the lease amount) will be extended even to situations where
goods reach a new lessee in India upon expiry of the lease, and
if the lessor located in SEZ (Special Economic Zone) pays GST
under forward charge.
● Export of goods from India via vessel and air. This exemption
will be extended till September 30, 2022.
● Admission to circuses, theatrical performances, award
ceremonies, sport events (other than recognized sport events),
and admission to recognized sport events which charge less than
Rs. 250/- per person for registration. This also includes
admission services for museums, national parks, wildlife
sanctuaries, zoos, etc.