GST was introduced because there was a growing need to replace innumerable indirect taxes in India, such as excise duties, service taxes, VAT, etc. The GST Act came into effect on the 1st of July 2017, This post will highlight some of the broader aspects related to GST exemption and examples of services that are exempt from GST.
Exemptions of Services under GST
While GST is applicable across all industries and sectors, in some cases, no GST is levied. The non-application of GST to goods and the exemptions of services under GST form this post’s base. It, however, is important to note that the exemption is applicable only in the case of specific industries and businesses supplying goods and services.
Typically, the exemption from GST can be categorized into three major categories. The exemption granted to individuals/businesses, the exemption extended to goods and the exemption of services under GST.
Also, Individuals and businesses qualify for GST exemption if their annual turnover is less than a pre-specified amount. However, at the time of GST’s implementation, individuals/companies with a yearly turnover of less than Rs. 20 lakhs qualified for GST exemption. Simultaneously, the government also declared a lower limit of Rs. 10 lakhs for exemption under GST for hilly and northeastern states such as Himachal Pradesh, Uttarakhand, Sikkim, Nagaland, Arunachal Pradesh, Jammu and Kashmir, Nagaland, Tripura, Mizoram, Manipur, Meghalaya, and Assam.
Moreover, the exemption limit for businesses engaged only in the supply of services remains constant at Rs. 10 lakhs for hilly and northeastern states and Rs. 20 lakhs for all other states.
GST Exemption on Aggregate Turnover
According to the GST Act, aggregate turnover is the sum total of all taxable supplies, the inter-state supply of goods, exports of goods and services, and exempt supplies.
- IGST, CGST, and SGST paid by the investors.
- The total value of the inward supply of goods and services.
- The taxes are payable in compliance with the reverse charge mechanism.
- The total value of non-taxable supplies of goods and services.
Services exempted under the GST Act
In terms of aggregate turnover, is Rs. 10 lakhs for hilly/northeastern states and Rs. 20 lakhs for all other states.
- Supplying labour for farming operations.
- Plant cultivation and animal husbandry services, excluding horse breeding.
- Services rendered during the course of farming. Examples include threshing, sun drying, sorting, and services that do not alter product characteristics.
- Renting or leasing agricultural machinery/land for use in farming.
- Loading, unloading, and storage services for agro-products, and warehouse fumigation services.
Apart from the above, the other services that qualify for a GST exemption are listed below.
- Public transport/Auto rickshaws/metro/trams/metered cabs, engaged in transporting people.
- Services relating to the transportation of goods outside India, including transport of milk, rice, agricultural products, etc.
- State and Central government services, including services provided by Reserve Bank of India, NPS, IRDAI, ESIC, SEBI, etc.
- Banking services rendered on Basic Savings bank account opened under the PM Jan Dhan Yojana (PMJDY).
- Veterinary services rendered by a clinic or doctor concerning the welfare of birds and animals.
- Services provided to the UN or other specified international institutions.
- Services of foreign diplomatic missions.
- Arbitral tribunal services.
- Educational institute services, including IIMs.
- Life and General Insurance Business services under specific categories.
- Services provided to a professional sports body.
- Blood bank services.
- Services of an artist performing in folk or classical art forms such as dance, music, theatre, etc.
- Religious and ceremonial services.
- Services rendered by operators of bio-medical waste treatment facilities.
If you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.
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