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Exemptions from GST
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) of the CGST Act, 2017].
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) of the CGST Act, 2017]. Thus, under GST, a supply not leviable to tax is also included within the purview of ‘exempt supply’.
Examples of supply 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.
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 of the activities/transactions becomes immaterial. Example: Services by way of renting of residential dwelling for use as residence.
(b) Exemption to specified suppliers
At times, exemption is given to specified suppliers only. Here, the status of recipient of the activities or transactions becomes immaterial. Example: Services by the Reserve Bank of India.
(c) Exemption to specified recipients
In some cases, exemption is given to specified recipient only. Here, the status of supplier of the activities or transactions becomes immaterial. Example: 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.
(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. Example: Services provided by the Insurance Regulatory and Development Authority of India to insurers under the Insurance Regulatory and Development Authority of India Act, 1999.