Goods and/or services are chargeable to GST if a transaction between the supplier and recipient falls within the purview of the charging section under the GST law. However, we have few exceptions to it. For instance, if a particular transaction or activity is listed as exempt supply or listed in negative list of schedule III, then such supply will not be chargeable to GST and the supplier will not be liable to pay tax.
In this article we have discussed what is exempted supply under GST law and what are the transactions which are listed as exempt supply.
What is exempted supply under GST
As per section 2(47) of the CGST Act, 2017, exempted supply is the supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under Section 11 of CGST Act or under Section 6 of the IGST Act and includes non-taxable supply.
As per Section 2(78) of the CGST Act, 2017, “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under the CGST Act or under the IGST Act. Which means exempted supply also includes supply which is not leviable to tax.
Section 11 of the CGST Act and Section 6 of the IGST Act allow the government to grant exemption from GST. State GST law also has similar provisions to grant exemption.
Why goods exempted from tax
In order to reduce the cost of essential goods and/or services such as unbranded atta, unbranded maida, unbranded besan, unpacked food grains, milk, egg and fresh vegetables, the government in public interest has exemption power in GST. By using this power the government has exempted below essential goods in public interest from charging GST.
List of goods exempt from GST
- Live asses, mules, hinnies, bovine animals, swine, sheep, goats, poultry, ducks, geese, turkey, guinea fowls, mammals, birds and insects
- Fish, Meat and Fillets
- Unbranded honey
- Fresh milk and pasteurized milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk
- Curd, Lassi and Buttermilk
- Unbranded Chena or paneer
- Birds’ eggs, in shell, fresh, preserved or cooked
- Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage
- Vegetables such as tomatoes, cucumbers, potatoes, onions, shallots, garlic, leeks and other alliaceous vegetables, Cabbages, cauliflowers, kohlrabi, kale and similar edible brassicas, Carrots, turnips, salad beetroot, salsify, celeriac, radishes and similar edible roots and other vegetables
- Fruits and Dry Fruits such as Coconuts, Brazil nuts, Almonds, Hazelnuts or filberts, walnuts, Chestnuts, Pistachios, Macadamia nuts, Kola nuts, Areca nuts, Bananas, Dates, pineapples, avocados, guavas, mangoes, Oranges, Mandarins, Citrus fruit, Melons, papaws, Apples, pears, Apricots, cherries, peaches, plums, sloes, Grapefruit, Lemons, limes, Grapes, strawberries, raspberries, blackberries, mulberries and loganberries, black, white or red currants and gooseberries, cranberries, bilberries, other nuts and fruits.
- Coffee beans, Unprocessed green leaves of tea, Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper berries, Fresh turmeric,Ginger and All goods of seed quality.
- Unbranded Wheat, Rye, Barley, Oats, Maize, Rice, Grain sorghum, Buckwheat, millet, canary seed, other cereals such as Jawar, Bajra, Ragi
- Wheat or meslin flour, Cereal flours other than of wheat or meslin, Cereal groats, meal and pellets
- Soya beans, Ground-nuts, Sunflower seeds and Oil Seeds
- Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki
- Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container)
- Tender coconut water other than put up in unit container and bearing a registered brand name
- Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake
- Human Blood and its components
- All types of contraceptives
- All goods and organic manure (other than put up in unit containers and bearing a registered brand name)
- Kajal (other than kajal pencil sticks), Kumkum, Bindi, Sindur, Alta
- Condoms and contraceptives
- Judicial, Non-judicial stamp papers, Court fee stamps when sold by the Government Treasuries or Vendors authorized by the Government
- Postal items, like envelope, Post card etc., sold by Government
- Rupee notes when sold to the Reserve Bank of India
- Printed Books, Brochures, Newspapers
- Silkworm, Raw silk, Khadi fabric, sold through Khadi and Village Industries Commission(KVIC) and KVIC certified institutions/outlets
- Spacecraft (including satellites) and suborbital and spacecraft launch vehicle
- Hearing aids
- Muddhas made of sarkanda and phool bahari jhadoo
- Slate pencils and chalk sticks
- Indigenous handmade musical instruments
- Passenger baggage
In our above list, we have selected certain essential goods listed in the list of goods which are taxed at zero rate or exempted from GST in India. You are requested to go through the list at CBIC site to know in detail all the goods that are taxed at nil rate or exempted under GST law.