Certain goods are kept under nil or 0% GST rate to benefit the masses. The government has classified certain goods and services as exempt from GST. Unlike with zero-rated goods and services, business owners cannot claim ITC for the sale of exempted goods and services.

In the GST system, a taxable event is Supply. For the government to consider an event as a supply, it should have the certain characteristics. However, suppliers of exempted goods and services are also exempt from registration. Therefore, if you are a trader of goods and services mentioned below, you do not have to register under GST.

Exempted Goods and Services

Exempted Goods Final
Exempted Services Final

Besides these, the following are few other exempted services on which no one can charge GST.

Agricultural services

This includes all services related to agriculture except the rearing of horses. Exempt agricultural services include:

  • cultivation,
  • harvesting,
  • supply of farm labor,
  • packaging,
  • renting or leasing of machinery for agricultural purposes,
  • warehouse activities, and
  • services by an Agricultural Produce Marketing Committee for the trade of agricultural produce.

GST Consulting, Exemptions under GST

Transportation services:

  • By road or bridge on payment of toll; transportation of goods by road. But, transport by transportation or courier agency is not exempt.
  • Goods transportation by inland waterways.
  • Where the gross amount charged is less than Rs. 1500.
  • Passenger transport by air in :
    • Manipur,
    • Meghalaya,
    • Assam,
    • Arunachal Pradesh,
    • Nagaland,
    • Sikkim,
    • Tripura, and
    • Bagdogra.
  • By non-AC horse or contract carriages.
  • Transporting agricultural produce, milk, salt, newspapers, or wood grains.
  • Services provided to goods transport agencies.
  • Hiring services to any state transport project. It also includes motor vehicles with a capacity to carry more than 12 passengers;

Services provided by the government and diplomatic missionaries

  • Diplomatic services to diplomats, including the United Nations.
  • Services by any foreign diplomatic mission located in India.
  • Life Insurance services by the Army, Naval and Air Force Groups.
  • Services provided by the Reserve Bank of India.
  • Life insurance services provided under the National Pension System;
  • Services by the Government or any local authority except the following services:
    1. Transportation of goods or passengers.
    2. Department of Posts services via speed post, express parcel post,
    3. Agency services provided to any individual other than the government,
    4. Planes/vessel related services within or beyond port/airport boundaries,
    5. Lastly, any other service provided to business men, except those that come under (a) and (b).

To know more about the services exempted from GST, view CBEC’s official list.

GST Accounting, Exemptions under GST