GST Exempted Goods: Complete List of Exempted Goods Under GST

When the GST regime was introduced, most of the products were taken under the ambit of the goods and services tax. There were a few that fell under the ‘zero tax rate’ category, and a few others were on the GST exemption list. How are GST-exempted goods and services different from zero-tax ones? And which goods and services fall in the list of exemption under GST? Let’s understand. 

What Is The GST Exemption List?

GST exemptions are provisions that remove or reduce the tax burden on specific goods and services. These exemptions make essential items more affordable and ease financial pressure on businesses and consumers. Some products and services are free from GST, while others have reduced rates.

If a product or service is on the GST exemption list, customers don’t have to pay GST on it. Similarly, businesses with annual revenue below Rs.20 lakh (or Rs.10 lakh for some north eastern states like Jammu & Kashmir, Uttarakhand, and Himachal Pradesh) are not required to register for GST.

Exemptions can vary over time and serve multiple purposes, such as supporting key industries or reducing costs for essential goods and services. To get a complete understanding of GST exemptions in India, refer to the exemption list. This includes details about exempt goods and services, notifications, and HSN codes for certain items.

Types of GST Exemptions

Some goods and services are entirely exempt from GST, meaning neither the supplier nor the buyer has to pay any tax. These are usually essential items like food grains or basic public services aimed at reducing financial burdens for consumers.

GST isn't applicable to intra-state supplies from unregistered sellers to registered buyers if the total value of such supplies doesn’t exceed Rs.5,000 in a day.

This applies to specific suppliers, like charitable organizations, regardless of the goods or services they offer.

Certain goods and services, such as healthcare, education, or public utilities like water, are exempt due to their nature.

Some exemptions depend on meeting specific conditions. For instance, agricultural supplies might be exempt only when used in certain ways. This ensures targeted relief for specific industries.

Are Exemptions The Same As Zero-Taxed Items Or Supplies?

The exempt list is different from the list of zero-rated and nil-rated supplies. India’s GST system categorizes supplies into Exempt, Nil-Rated, Zero-Rated, and Non-GST, each with unique tax treatments and ITC implications. Here’s how they differ:

• Exempt Supplies are not subject to GST, meaning no GST is charged on these goods or services. However, suppliers cannot claim the Input Tax Credit (ITC) for taxes paid on inputs. Examples include essential items like fresh fruits, vegetables, milk, and healthcare services.
• Nil-rated supplies are taxed at a 0% GST rate. Unlike exempt supplies, suppliers can claim ITC for GST paid on inputs and services used. Examples include exports of certain agricultural products and pharmaceuticals.
• Zero-Rated Supplies also have a 0% GST rate but specifically apply to exports of goods or services, including supplies to Special Economic Zones. What sets them apart is that the entire supply chain remains tax-free, and suppliers can claim ITC on inputs and services. This ensures no tax burden impacts exports, helping boost global competitiveness.
• Non-GST Supplies fall outside the GST system entirely. No GST is levied, collected, or claimable as ITC on these. These include petroleum products, alcohol for human consumption, and specific transactions like stamp or currency sales.

In other words, the key differences lie in tax rates and ITC eligibility: Exempt supplies block ITC, and Nil-Rated and Zero-Rated supplies enable ITC. On the flip side, non-GST supplies are entirely excluded from GST’s purview. 

List Of Exempted Goods And Services Under GST:

A] Services In GST Exemption List:

B] Goods In GST Exemption List:

C] GST Exemption from Registration:

• You don’t need GST registration if your turnover stays within the exemption limit. For goods, this is up to Rs.40 lakh, and for services, it’s Rs.20 lakh. In special category states, the limits are Rs.20 lakh for goods and Rs.10 lakh for services.
• You’re also exempt if you deal only in NIL-rated or exempt goods and services. This includes items like fresh milk, honey, cheese, and agricultural services.
• If your activities don’t involve the supply of goods or services — like funeral services or dealing in petroleum products — you’re not required to register either.
• Lastly, if you supply goods under reverse charges, such as unshelled cashew nuts or tobacco leaves, GST registration isn’t necessary.

Conclusion

GST exemptions, which vary by country and are periodically updated, are often introduced to reduce the tax burden on essential items or support specific industries. In some cases, exemptions are recommended by the GST Council, granted through official notifications for specific goods, or issued under special orders in exceptional situations. 

Additionally, the government may identify exemptions that directly benefit the public, ensuring relief in vital areas. So, to keep your tax plan working at all times, it is essential to stay updated with the changes as and when they happen. 

FAQs

Ans. Small businesses with an annual turnover of up to Rs.40 lakh (Rs.20 lakh for special category states) are not required to register for or pay GST.

Ans. When a supply changes from taxable to exempt, taxpayers must reverse the input tax credit (ITC) claimed on stock (inputs, semi-finished, or finished goods) and capital goods held before the exemption date. This reversal can be done by paying an amount equal to the ITC used, either in cash or by utilizing available credit.

Ans. Yes, issuing a tax invoice is mandatory, even for exempt goods. Although no GST is charged, the invoice serves as a transaction record and is important for maintaining accurate business documentation and compliance.