ICAI Notes: Exemptions from GST | Taxation for CA Intermediate PDF Download

 Page 1


a
 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
5
2 
 
 
   
 
 
 EXEMPTIONS FROM  
 GST 
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the Chapter 
are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? describe the power of the Government to grant exemption 
from CGST/IGST. 
? provide an overview of the goods exempt from GST. 
? identify and analyse various services exempt from GST. 
 
  
© The Institute of Chartered Accountants of India
Page 2


a
 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
5
2 
 
 
   
 
 
 EXEMPTIONS FROM  
 GST 
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the Chapter 
are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? describe the power of the Government to grant exemption 
from CGST/IGST. 
? provide an overview of the goods exempt from GST. 
? identify and analyse various services exempt from GST. 
 
  
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.2 
 
 
1. INTRODUCTION 
When a supply of goods and/or 
services falls within the purview of 
charging section, such supply is 
chargeable to GST.  However, for 
determining the liability to pay the 
tax, one needs to further check 
whether such supply of goods 
and/or services are exempt from 
tax.   
Exempt supply has been defined 
as supply of any goods or services 
or both which attracts nil rate of 
tax or which may be wholly exempt from tax and includes non-taxable supply 
[Section 2(47)].  
Non-taxable supply means a supply of goods or services or both which is not 
leviable to tax under CGST Act or under the IGST Act [Section 2(78)].  Thus, under 
GST, a supply not leviable to tax is also included within the purview of ‘exempt 
supply’. 
Exemption from GST in 
India
Power of the Government to grant exemption from tax
Goods exempt from tax
Services exempt from tax
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
Page 3


a
 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
5
2 
 
 
   
 
 
 EXEMPTIONS FROM  
 GST 
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the Chapter 
are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? describe the power of the Government to grant exemption 
from CGST/IGST. 
? provide an overview of the goods exempt from GST. 
? identify and analyse various services exempt from GST. 
 
  
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.2 
 
 
1. INTRODUCTION 
When a supply of goods and/or 
services falls within the purview of 
charging section, such supply is 
chargeable to GST.  However, for 
determining the liability to pay the 
tax, one needs to further check 
whether such supply of goods 
and/or services are exempt from 
tax.   
Exempt supply has been defined 
as supply of any goods or services 
or both which attracts nil rate of 
tax or which may be wholly exempt from tax and includes non-taxable supply 
[Section 2(47)].  
Non-taxable supply means a supply of goods or services or both which is not 
leviable to tax under CGST Act or under the IGST Act [Section 2(78)].  Thus, under 
GST, a supply not leviable to tax is also included within the purview of ‘exempt 
supply’. 
Exemption from GST in 
India
Power of the Government to grant exemption from tax
Goods exempt from tax
Services exempt from tax
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
EXEMPTIONS FROM GST 
a
a 
 
5.3 
Supplies not leviable to tax are alcoholic liquor for human consumption, specified 
petroleum products namely Petroleum Crude, High Speed Diesel, Motor spirit 
(commonly known Petrol), Natural Gas and Aviation Turbine Fuel. 
Power to grant exemption from GST has been granted vide section 11 of the CGST 
Act and vide section 6 of the IGST Act.  State GST laws also contain identical 
provisions granting power to exempt SGST.  Under GST, essential goods/services, 
i.e. public consumption products/services, have been exempted.  Items such as 
unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the 
items exempted from GST.  Further, essential services like health care services, 
education services, etc. have also been exempted.   
It is important to note that exemption under GST may be provided in any of the 
following manner: 
(a) Exemption to specified activities or transactions 
Sometimes, exemption is provided in respect of specified activities or 
transactions. Consequently, the status of the supplier or recipient 
becomes immaterial. 
(1) Services by way of transfer of a going concern, as a whole 
or an independent part thereof.  
(2) Services by way of loading, unloading, packing, storage 
or warehousing of rice. 
(b) Exemption to specified suppliers 
At times, exemption is given to specified suppliers only. Here, the status 
of recipient becomes immaterial. 
(3) Services provided by the Central Government, State 
Government, Union territory or local authority where the 
consideration for such services does not exceed ` 5,000. 
(4) Services by an entity registered under section 12AA or 12AB of the 
Income-tax Act, 1961 by way of charitable activities. 
(c) Exemption to specified recipients 
In some cases, exemption is given to specified recipient only. Here, the 
status of supplier becomes immaterial. 
© The Institute of Chartered Accountants of India
Page 4


a
 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
5
2 
 
 
   
 
 
 EXEMPTIONS FROM  
 GST 
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the Chapter 
are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? describe the power of the Government to grant exemption 
from CGST/IGST. 
? provide an overview of the goods exempt from GST. 
? identify and analyse various services exempt from GST. 
 
  
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.2 
 
 
1. INTRODUCTION 
When a supply of goods and/or 
services falls within the purview of 
charging section, such supply is 
chargeable to GST.  However, for 
determining the liability to pay the 
tax, one needs to further check 
whether such supply of goods 
and/or services are exempt from 
tax.   
Exempt supply has been defined 
as supply of any goods or services 
or both which attracts nil rate of 
tax or which may be wholly exempt from tax and includes non-taxable supply 
[Section 2(47)].  
Non-taxable supply means a supply of goods or services or both which is not 
leviable to tax under CGST Act or under the IGST Act [Section 2(78)].  Thus, under 
GST, a supply not leviable to tax is also included within the purview of ‘exempt 
supply’. 
Exemption from GST in 
India
Power of the Government to grant exemption from tax
Goods exempt from tax
Services exempt from tax
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
EXEMPTIONS FROM GST 
a
a 
 
5.3 
Supplies not leviable to tax are alcoholic liquor for human consumption, specified 
petroleum products namely Petroleum Crude, High Speed Diesel, Motor spirit 
(commonly known Petrol), Natural Gas and Aviation Turbine Fuel. 
Power to grant exemption from GST has been granted vide section 11 of the CGST 
Act and vide section 6 of the IGST Act.  State GST laws also contain identical 
provisions granting power to exempt SGST.  Under GST, essential goods/services, 
i.e. public consumption products/services, have been exempted.  Items such as 
unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the 
items exempted from GST.  Further, essential services like health care services, 
education services, etc. have also been exempted.   
It is important to note that exemption under GST may be provided in any of the 
following manner: 
(a) Exemption to specified activities or transactions 
Sometimes, exemption is provided in respect of specified activities or 
transactions. Consequently, the status of the supplier or recipient 
becomes immaterial. 
(1) Services by way of transfer of a going concern, as a whole 
or an independent part thereof.  
(2) Services by way of loading, unloading, packing, storage 
or warehousing of rice. 
(b) Exemption to specified suppliers 
At times, exemption is given to specified suppliers only. Here, the status 
of recipient becomes immaterial. 
(3) Services provided by the Central Government, State 
Government, Union territory or local authority where the 
consideration for such services does not exceed ` 5,000. 
(4) Services by an entity registered under section 12AA or 12AB of the 
Income-tax Act, 1961 by way of charitable activities. 
(c) Exemption to specified recipients 
In some cases, exemption is given to specified recipient only. Here, the 
status of supplier becomes immaterial. 
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.4 
(6) Services provided to the Central Government, State 
Government, Union territory under any insurance scheme for 
which total premium is paid by the Central Government, 
State Government, Union territory. 
(7) Services provided to the Central Government, State Government, 
Union territory administration under any training programme, for which 
75% or more of the total expenditure is borne by the Central 
Government, State Government, Union territory administration. 
(d) Exemption to specified suppliers and specified recipients 
Sometimes, exemption is given only when activities or transactions are 
carried out by specified suppliers for specified recipients only. 
(8) Services by the Employees’ State Insurance Corporation 
to persons governed under the Employees’ State Insurance 
Act, 1948. 
(9) Services by National Pension System (NPS) Trust to its members 
against consideration in the form of administrative fee. 
In this chapter, we shall discuss the power to grant exemption from tax under CGST 
Act/IGST Act, list of services exempt from GST in detail and an overview of the 
goods exempt from tax.   
2. POWER TO GRANT EXEMPTION FROM TAX 
[SECTION 11 OF THE CGST ACT/SECTION 6 OF 
THE IGST ACT] 
 
Section 11 Power to grant exemption from tax 
Sub-section Particulars 
(1) Where the Government is satisfied that it is necessary in the 
public interest so to do, it may, on the recommendations of the 
STATUTORY PROVISIONS 
© The Institute of Chartered Accountants of India
Page 5


a
 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
5
2 
 
 
   
 
 
 EXEMPTIONS FROM  
 GST 
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the Chapter 
are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? describe the power of the Government to grant exemption 
from CGST/IGST. 
? provide an overview of the goods exempt from GST. 
? identify and analyse various services exempt from GST. 
 
  
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.2 
 
 
1. INTRODUCTION 
When a supply of goods and/or 
services falls within the purview of 
charging section, such supply is 
chargeable to GST.  However, for 
determining the liability to pay the 
tax, one needs to further check 
whether such supply of goods 
and/or services are exempt from 
tax.   
Exempt supply has been defined 
as supply of any goods or services 
or both which attracts nil rate of 
tax or which may be wholly exempt from tax and includes non-taxable supply 
[Section 2(47)].  
Non-taxable supply means a supply of goods or services or both which is not 
leviable to tax under CGST Act or under the IGST Act [Section 2(78)].  Thus, under 
GST, a supply not leviable to tax is also included within the purview of ‘exempt 
supply’. 
Exemption from GST in 
India
Power of the Government to grant exemption from tax
Goods exempt from tax
Services exempt from tax
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
EXEMPTIONS FROM GST 
a
a 
 
5.3 
Supplies not leviable to tax are alcoholic liquor for human consumption, specified 
petroleum products namely Petroleum Crude, High Speed Diesel, Motor spirit 
(commonly known Petrol), Natural Gas and Aviation Turbine Fuel. 
Power to grant exemption from GST has been granted vide section 11 of the CGST 
Act and vide section 6 of the IGST Act.  State GST laws also contain identical 
provisions granting power to exempt SGST.  Under GST, essential goods/services, 
i.e. public consumption products/services, have been exempted.  Items such as 
unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the 
items exempted from GST.  Further, essential services like health care services, 
education services, etc. have also been exempted.   
It is important to note that exemption under GST may be provided in any of the 
following manner: 
(a) Exemption to specified activities or transactions 
Sometimes, exemption is provided in respect of specified activities or 
transactions. Consequently, the status of the supplier or recipient 
becomes immaterial. 
(1) Services by way of transfer of a going concern, as a whole 
or an independent part thereof.  
(2) Services by way of loading, unloading, packing, storage 
or warehousing of rice. 
(b) Exemption to specified suppliers 
At times, exemption is given to specified suppliers only. Here, the status 
of recipient becomes immaterial. 
(3) Services provided by the Central Government, State 
Government, Union territory or local authority where the 
consideration for such services does not exceed ` 5,000. 
(4) Services by an entity registered under section 12AA or 12AB of the 
Income-tax Act, 1961 by way of charitable activities. 
(c) Exemption to specified recipients 
In some cases, exemption is given to specified recipient only. Here, the 
status of supplier becomes immaterial. 
© The Institute of Chartered Accountants of India
GOODS AND SERVICES TAX 
 
a
 
 5.4 
(6) Services provided to the Central Government, State 
Government, Union territory under any insurance scheme for 
which total premium is paid by the Central Government, 
State Government, Union territory. 
(7) Services provided to the Central Government, State Government, 
Union territory administration under any training programme, for which 
75% or more of the total expenditure is borne by the Central 
Government, State Government, Union territory administration. 
(d) Exemption to specified suppliers and specified recipients 
Sometimes, exemption is given only when activities or transactions are 
carried out by specified suppliers for specified recipients only. 
(8) Services by the Employees’ State Insurance Corporation 
to persons governed under the Employees’ State Insurance 
Act, 1948. 
(9) Services by National Pension System (NPS) Trust to its members 
against consideration in the form of administrative fee. 
In this chapter, we shall discuss the power to grant exemption from tax under CGST 
Act/IGST Act, list of services exempt from GST in detail and an overview of the 
goods exempt from tax.   
2. POWER TO GRANT EXEMPTION FROM TAX 
[SECTION 11 OF THE CGST ACT/SECTION 6 OF 
THE IGST ACT] 
 
Section 11 Power to grant exemption from tax 
Sub-section Particulars 
(1) Where the Government is satisfied that it is necessary in the 
public interest so to do, it may, on the recommendations of the 
STATUTORY PROVISIONS 
© The Institute of Chartered Accountants of India
 
 
EXEMPTIONS FROM GST 
a
a 
 
5.5 
Council, by notification, exempt generally, either absolutely or 
subject to such conditions as may be specified therein, goods or 
services or both of any specified description from the whole or 
any part of the tax leviable thereon with effect from such date as 
may be specified in such notification 
(2) Where the Government is satisfied that it is necessary in the 
public interest so to do, it may, on the recommendations of the 
Council, by special order in each case, under circumstances of 
an exceptional nature to be stated in such order, exempt from 
payment of tax any goods or services or both on which tax is 
leviable. 
(3) The Government may, if it considers necessary or expedient so to 
do for the purpose of clarifying the scope or applicability of any 
notification issued under sub-section (1) or order issued under 
sub-section (2), insert an explanation in such notification or 
order, as the case may be, by notification at any time within one 
year of issue of the notification under sub-section (1) or order 
under sub-section (2), and every such explanation shall have 
effect as if it had always been the part of the first such notification 
or order, as the case may be. 
Explanation––For the purposes of this section, where an exemption in respect of 
any goods or services or both from the whole or part of the tax leviable thereon 
has been granted absolutely, the registered person supplying such goods or 
services or both shall not collect the tax, in excess of the effective rate, on such 
supply of goods or services or both. 
 
ANALYSIS 
(i) Exemption from payment of tax: GST law empowers the Central 
Government or State Government, as the case may be, to grant exemption 
from tax.  The exemption is granted on recommendation of the GST Council.   
© The Institute of Chartered Accountants of India