List of Goods & Services Exempted Under GST

GST

26 Jun 2024

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Introduction

The Goods and Services Tax (GST) is a unified indirect tax system that replaced multiple taxes in India. Among its key provisions, GST exemptions aim to reduce the tax burden on essential goods and services, ensuring affordability and economic growth.

While GST applies to most goods and services, some essential items are exempt to support economic welfare. Understanding these exemptions helps businesses, consumers, and policymakers navigate GST regulations efficiently.

What are GST Exemptions?

GST exemptions refer to goods and services that do not attract any GST. These exemptions are categorized into:

1. Exempted Goods

Essential products such as food, healthcare, and educational materials are exempt from GST to support public welfare.

2. Exempted Services

Critical services like healthcare, education, and public transport are GST-free to enhance affordability.

3. Zero-Rated Supplies

Exports and supplies to Special Economic Zones (SEZs) attract a 0% GST rate, allowing businesses to claim tax refunds.

These exemptions help keep essential items affordable, support key industries, and promote fair taxation.

GST Free Goods: List of Exempted Goods

The following goods are exempt from GST as per the latest CBIC notifications:

1. Agricultural & Food Products

Fresh fruits, vegetables, and unprocessed food grains (rice, wheat, pulses).
Milk, curd, eggs, and natural honey.
Unprocessed spices and jaggery.

2. Essential Commodities

Salt and potable water (excluding bottled drinking water).
Raw silk, khadi fabric, and handloom products.
Renewable energy devices (solar panels, wind turbines).

3. Healthcare Essentials

Blood and its derivatives.
Vaccines and life-saving drugs (e.g., insulin, cancer medications).
Medical implants and essential diagnostic kits.

4. Educational & Cultural Goods

Printed books (excluding e-books).
Slates, pencils, chalk, and drawing books.
Indigenous handmade products (specific handicrafts).

GST Free Services: List of Exempted Services

Certain critical services are exempt to ensure accessibility and affordability:

1. Healthcare Services

Services by hospitals, doctors, and paramedics.
Diagnostic and blood donation services.
Ambulance and emergency medical transport.

2. Educational Services

School and college tuition fees.
Government-recognized vocational training programs.
Public libraries and research institutions.

3. Public Utilities & Transportation

Non-AC public transport (buses, trains, metro, ferries).
Water supply and sewage treatment services.
Rural electricity distribution services.

4. Charitable & Religious Services

Services by registered NGOs and charitable trusts.
Religious institutions providing community welfare services.

FAQs on GST Exemptions

1. What is the GST exemption limit for small businesses?

Small businesses with an annual turnover of up to ₹40 lakh (₹20 lakh for special category states) are exempt from GST registration and payment. For more detail read our blog Threshold Limit for GST Registration

2. Are government services exempt from GST?

Yes, services related to sovereign functions like defense, law enforcement, and public administration are exempt from GST. For more idea, refer our blog on GST on Import and Export Duties in India

3. Is GST applicable on exports?

No, exports fall under zero-rated supplies, meaning they are taxed at 0%, and exporters can claim a refund for input taxes.

4. Are training programs for agriculture exempt?

Yes, agricultural training services provided by recognized agencies are GST-free.

5. Is public transport exempt from GST?

Yes, non-AC public transport services, including rail, metro, and buses, are GST-exempt to keep commuting affordable.

Zero-Rated Supplies and Special Cases

Zero-rated supplies such as exports and supplies to SEZs attract a 0% GST rate. Additionally, businesses with annual turnovers below the threshold limit (ranging from ₹20 lakh to ₹40 lakh) are exempt from GST registration and payment.

Recent Updates on GST Exemptions: December 21, 2024

Staying informed about GST updates is essential. For instance, recent GST Council meetings have introduced adjustments to the exemption list. Key updates include:

Rejection of GST inclusion for aviation fuel .

Introduction of new categories under exemptions for healthcare products. For a detailed breakdown of these changes, refer to India’s Tax Panel Updates.

Impact of GST Exemptions on Businesses

Understanding GST exemptions is vital for businesses. These exemptions:

Reduce Costs: Lower operational costs for businesses dealing in exempt goods and services.
Affect ITC Claims: Input Tax Credit (ITC) is not available for exempt supplies.
Promote Sectors: Healthcare, education, and agriculture benefit significantly from GST exemptions.

Conclusion

GST exemptions aim to make essential goods and services accessible, benefiting various sectors such as agriculture, healthcare, and education. By understanding these exemptions, businesses and consumers can navigate the GST framework more effectively, ensuring compliance and taking full advantage of the relief provided.