List of Goods & Services Exempt From GST – GST Exemptions

This blog covers the different types of GST exemptions, eligibility criteria, and how businesses can take advantage of them. By reading this blog, businesses can gain clarity on navigating exemptions, reducing their tax burdens, and ensuring compliance with the GST framework.

What is GST Exemption?

GST exemption refers to goods, services, or entities excluded from Goods and Services Tax (GST) under specified conditions. Essential items like unprocessed food, healthcare, and education are typically exempt. Additionally, businesses with annual turnover below ₹20 lakh (₹10 lakh for special category states) are exempt from GST registration requirements.

List of Goods Exempted from GST in India

1. Agricultural Products:
   • Fresh fruits, vegetables, and cereals.
   • Unprocessed items like milk, eggs, honey, and salt.
   • Seeds and plants for agricultural purposes.
2. Educational Materials:
   • Printed books and educational texts.
   • Maps, atlases, and globes.
3. Health and Medical Supplies:
   • Blood and its derivatives.
   • Healthcare equipment used by disabled individuals (e.g., wheelchairs).
4. Essential Commodities:
   • Water (excluding packaged drinking water).
   • Pooja samagri (religious materials) like incense sticks.
5. Other Essential Goods:
   • Handloom products.
   • Non-branded, unpackaged food items like rice and wheat.

List of Services Exempted from GST in India

1. Education:
   • Services provided by educational institutions (up to higher secondary).
   • Skill development and vocational training programs.
2. Healthcare:
   • Medical services provided by hospitals, clinics, and dispensaries.
   • Diagnostic and preventive health services.
3. Transportation:
   • Public transportation services such as metro, tram, and local train tickets.
   • Inland waterway transportation of goods and passengers.
4. Charitable Activities:
   • Services provided by charitable organizations related to public health, education, and relief to the poor.
5. Government Services:
   • Services provided by the Reserve Bank of India.
   • Activities performed by local bodies and public officials in an official capacity.

GST Exemption Limit

The current GST exemption limit is:

• ₹40 lakhs for businesses dealing in goods.
• ₹20 lakhs for businesses providing services.

Businesses with annual revenue below these thresholds are not required to register for GST. However, they can choose to register voluntarily to avail benefits like input tax credit and improved business credibility.

Here is a complete list of sector-wise GST exempted limits in India with a basic focus on some of the services, rent and profession wise exemption limits.

Category	GST Exemption Limit	Details
GST Exemption Limit on Rent	₹20 Lakhs (for rental income from property)	Rent income below ₹20 Lakhs is exempt from GST registration.
GST Exemption Limit for Service Sector	₹20 Lakhs (₹10 Lakhs for NE & hill states)	Service providers with turnover below ₹20 Lakhs are exempt from GST.
GST Exemption Limit in Tamil Nadu	₹40 Lakhs (₹20 Lakhs for Service Providers)	Tamil Nadu follows the general GST exemption thresholds.
GST Exemption Limit for Business	₹40 Lakhs (₹20 Lakhs for Service Providers)	Businesses with turnover below ₹40 Lakhs are GST-exempt.
GST Exemption Limit for Service Providers	₹20 Lakhs (₹10 Lakhs for NE & hill states)	Service providers earning below ₹20 Lakhs are exempt from GST.
GST Exemption Limit for Commercial Rent	₹20 Lakhs (for landlords renting out property)	Landlords with rent income below ₹20 Lakhs are exempt from GST.
GST Exemption Limit for Professionals	₹20 Lakhs (₹10 Lakhs for certain states)	Professionals like doctors and lawyers with turnover below ₹20 Lakhs are exempt.

Types of GST Exemptions

There are different types of GST exemptions depending on certain circumstances or the nature of the supply. These categories encompass Absolute Exemptions, Conditional Exemptions and Non-Taxable Supplies with their own specific conditions on which the applicability of these can be based under the GST law.

• Absolute Exemptions

This exemption is granted straightforwardly and without any stipulations.  

Example: The transmission or the distribution of electricity by a utility engaged in either of the two activities.

• Conditional Exemptions

This exemption is only valid in certain circumstances.  

Example: Healthcare provision rendered within a clinical establishment incurring room charges other than ICU/CCU/ICCU/NICU exceeding Rs. 5000 per day.

• Non-Taxable Supplies

A non taxable term means those goods or services which are not taxed using the provision of either CGST Act or the provisions of IGST ACT. However, in order for a transaction in GST to be regarded as a non-taxable supply, the transaction must first be considered a ‘supply’ for the purposes of the laws governing GST.

Below is a detailed overview of the key categories of GST-exempt goods and services:

GST Exemption for Educational Institutions

As per the provisions of the GST Act, the educational institutions which provide education from pre-school to high secondary school or its equivalent are exempt from the goods and services tax (GST). Furthermore, auxiliary services offered to such educational institutions for teaching-related activities below the higher secondary level are also exempt from goods and services tax (GST).

GST Exemption for Startups

While a startup’s total turnover stays below 40 lakhs for goods and 20 lakhs for services, the startup is exempt from registering for and charging GST. In addition, it also calls for startups who only supply exempted goods or services to be exempt from registration under GST.

GST Exemption for Advocates and Law Firms

To clarify the GST law on legal services, every type of legal services, whether rendered by a practicing advocate or by a law firm, attract the Reverse Charge Mechanism (RCM) in respect of the payment. Lawyers and law firms do not have any other GST liability on the of their services and as such, they are not expected to register for GST because of the nature of their business activities.

GST Exemption for SEZ Units

A Special Economic Zone (SEZ) operation comes with several tax benefits. Supplies of goods or services to an SEZ developer or unit are excluded from tax under GST and attributed as exports. This enables the suppliers to

(a) Provide against bond or a Letter of Undertaking (LUT) without payment of IGST and avail input tax credit (ITC) or

(b) Provide upon payment of IGST and request reimbursement of the IGST paid for the supply.

If SEZs sell/utilize their goods or services to any other party, it is treated as a simple interstate supply and would attract IGST. On the other hand, if an SEZ is providing goods or services to a Domestic Tariff Area (DTA), such a transaction is considered an export to the DTA. In this scenario taxes and tariffs are only bearable by the DTA recipient and not the SEZ itself.

GST Exemption for Healthcare Professionals

The 47th meeting of the GST Council had assured that doctors’ services in relation to Assisted Reproductive Technology (ART) are held to be non-GST services as they fall under health care services.

In addition, the GST on ostomy and orthopedic appliances which will include artificial slices has also been reduced from the previous rate of 12% to 5%. Supplies by the operators of bio-medical waste treatment facilities to clinical establishments will therefore be subject to a 12% GST rate with a right of ITC being available.

GST Exemption for Co-operative Societies

Co-operative societies undertaking activities related to agriculture, banking, and lending to their members are eligible for GST exemptions. These exemptions facilitate co-operatives in providing these services to their members with no increase in costs due to taxes.

How to Claim GST Exemptions?

Claiming GST exemptions involves specific steps for businesses handling exempt supplies:

• Documentation Requirements

The following documents are required for claiming the GST concession:

• • Aadhar Card
  • PAN Card
  • Unique Disability ID card (UDID) issued by the Ministry of Social Justice and Empowerment, or a Disability Certificate issued by the Central, State, or District Government, with the issuing authority’s signature, seal, and registration number.
  • Income Tax Returns for the last three years.
  • A Self-Declaration confirming that the applicant has not availed of this concession in the past five years and agrees not to sell the vehicle within five years of purchase, as per the format in Annexure C.
  • Details of the vehicle model they wish to purchase, including the dealer’s name and the RTO where the vehicle will be registered.

• Reporting in GST Returns

  • Exempt Supplies: Report exempt supplies in the relevant columns of GSTR-1 and GSTR-3B.
  • Supplies At Nil Rate: Place supplies charged at zero percent in the correct section.
  • Non-GST Supplies: Ensure that these types of supplies are well documented in the return form.
  • Record Keeping: Keep proper records of exempt and nil-rated supplies for adherence to the set regulations. 
  • GST Filing: Ensure that every detail is in conformity with the GST submission requirements so as to facilitate the correct filing of the report.

GST Exemption from Registration

Specific persons and organizations, for example, farmers, are not mandated to register for the Goods and Services Tax. Also, individuals providing NIL Rated or Exempt goods like fresh milk do not have to register for GST. Moreover, participants of activities that are not covered by VAT such as supplying petroleum products do not require to register for VAT.

Turnover-Based Exemptions

Certain types of businesses and service providers, however, may also qualify for GST exemption depending on their annual turnover.

• Goods: Any business with an aggregate turnover not exceeding ₹40 lakh is not required to those provisions of the GST Act that seek registration.
• Services: Service providers with an annual turnover of less than ₹20 lakh are not liable to register for GST.
• Special Category States: For special category states, the threshold limits are further decreased to ₹20 lakh for trade in goods and ₹10 lakh for trade in services.

Therefore, the comprehension of these turnover-based exemptions is very important for these companies to ease the burden of tax compliance on them.

Exemption for Agriculturists

• Individuals involved solely in furnishing unrefined agricultural produce are not required to obtain gst registration. 
• This exemption aids in lowering the tax liability for farmers thereby promoting growth within the agricultural sector.
• This exception alleviates the strain of the burdening process on the farmers and ensures that there is no extra tax burden imposed on them.

Major Notifications

This is a brief recap of important GST notifications focusing mainly on exemptions of certain goods and services due to Notification No. 12/2017-Central Tax (Rate), that brings out certain categories like: 

• All the products are exempted under tax which include the primary agricultural produce, health and medical supplies, basic commodities such as milk and salt, etc therefore they are listed as goods which attract a nil rate of tax. 
• Clinical services, educational services and services rendered by non profit organizations get exempted, appreciating the importance of such sectors and also reducing compliance costs. 

It is appropriate to acknowledge that these exemptions are meant to help financially and ease operations of those sectors considered vital or beneficial to society under the rules of the GST.

• Recent Updates on Exemption Policies

Keep yourself updated with the latest changes in the policies concerning the exemptions of GST, which includes the following aspects.

• • Sectoral Capping-Attained Revamping: In which there are redefined turnover limits imposed on the start-ups and the smaller organizations so that they can be exempted depending on the revenue turning over annually and the area, such limitations being relaxed for the special category states.
  • The Healthcare and Education was Exempted- New developments are extending the exemptions from a few healthcare services, especially in the provision of services like assisted reproductive technology ART services, and changes in education services exemption to include services rendered by registered institutions.

These changes have been made primarily in order to help in the easing of GST regulations to the businesses classified as essential, in an effort to reduce taxes on such businesses while still being in sync with the current state of the economy.

Differences Between Exempt, Nil-Rated, Zero-Rated, and Non-GST Supplies

Type	Definition	Input Tax Credit (ITC)	Examples
Exempt Supplies	Goods or services that do not attract GST. Businesses cannot charge GST on these transactions.	Not Allowed	Bread, Fresh fruits, Fresh milk, Curd
Nil-Rated Supplies	Supplies with a GST rate of 0%.	Not Allowed	Grains, Salt, Jaggery
Zero-Rated Supplies	Goods or services exported or sold in SEZs with a GST rate of 0%. Transactions qualify for ITC.	Allowed	Exports, Supplies to SEZs
Non-GST Supplies	Goods or services outside the GST framework but may attract other taxes based on state or national regulations.	Not Applicable	Petroleum products, Alcohol

Significance of GST Exemptions

GST exemptions aim to ensure that essential goods and services remain affordable for the general public. These exemptions also support sectors like agriculture, education, and healthcare, which are critical to the country’s socio-economic growth.

To encourage the provision of basic services in certain sectors and encourage some economic activities, there are GST exemptions. These exemptions assist Educational Institutions, Start-ups, Advocates, and Law Firms at large in tax burden alleviation in fields such as education, small-scale businesses, and legal services.

Conclusion on GST Exemptions

Understanding GST exemptions is very important for all, including businesses, service providers, and taxpayers, as it helps in compliance, reducing the tax burden, and avoiding penalties. Different categories of exemptions, like exempt, nil-rated, and zero-rated supplies, as tools for effective tax management and operations of the business. 

In addition, the government provides GST exemptions in this country to encourage participation in key economic sectors such as healthcare, education, agriculture, and so forth, which helps in providing these services at low costs. OEMs must update their information on existing regulations regularly to remain compliant and not incur additional expenses. It’s important for businesses to regularly assess their activities to ensure they are fully compliant with the GST exemption rules. For further guidance, consult tax professionals to ensure your business stays on track with the latest regulations.

FAQs on GST Exemptions

Can startups benefit from GST exemptions?

Yes, startups can benefit from GST exemptions if their turnover is below the specified threshold.

How to issue invoices for exempt supplies?

For exempt supplies, use a Bill of Supply instead of a regular tax invoice.

Do SEZ supplies qualify for zero-rating?

Yes, SEZ supplies are eligible for zero-rating under GST, and Input Tax Credit (ITC) can be claimed on related inputs.