𝗣𝗥𝗔𝗗𝗘𝗘𝗣 𝗞𝗔𝗟𝗥𝗔🎓
🅒🅞🅝🅒🅔🅟🅣 🅒🅛🅐🅢🅢🅔🅢
ʷʰᵉʳᵉ ᵉˣᶜᵉˡˡᵉⁿᶜᵉ ⁱˢ ᵃ ᶜᵘˡᵗᵘʳᵉ
🌐sᴏᴄɪᴀʟᴍᴇᴅɪᴀ ɴᴇᴛᴡᴏʀᴋ🌐
INTRODUCTION
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)].
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)]. Thus, under GST, a supply not leviable to tax is also included within the purview of ‘exempt supply’.
POWER TO GRANT EXEMPTION FROM TAX [SECTION 11 OF THE CGST ACT/SECTION 6 OF THE IGST ACT]
3. GOODS EXEMPT FROM TAX
A list of items has been notified under section 11(1) of the CGST Act, 2017/ section 6(1) of the IGST Act, 2017. These items have been exempted from whole of the tax.
4. LIST OF SERVICES EXEMPT FROM TAX
Notification No. 12/2017 Central Tax (Rate) dated 28.06.20173 (hereafter referred to as “the Notification”) unless otherwise specified, has exempted various services wholly from CGST. Each of the entries of the exemption notification have been discussed below:
A. SERVICES PROVIDED BY CHARITABLE/RELIGIOUS TRUST
Entry 1 exempts services supplied by an entity registered under section 12AA or 12AB of the Income-tax Act, 1961 by way of charitable activities. Thus, in order to claim exemption under Entry 1, following two conditions must be satisfied:-
(i) The entity should be registered under section 12AA or 12AB of the Income-tax Act, 1961, and
(ii) The entity must carry out one or more of the specified charitable activities. Before proceeding further, let us first understand the meaning of term
Agriculture related services
The words ‘Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel,
raw material or other similar products’ used in Entry 54 include activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry, etc.
Educational services
Education is fundamental to the nation building process. The term “Education” is not defined in the CGST Act, 2017, but as per Apex Court decision in “Loka Shikshana Trust v. CIT”, education is process of training and developing knowledge, skill and character of students by normal schooling.
Taxing the Education Sector has always been a sensitive issue, as education is seen more as a social activity than a business one. The Government has a constitutional obligation to provide free and compulsory elementary education to every child. Thus, to promote education, it would be beneficial if educational services are exempted from tax.
Services provided by an educational institution to its students, faculty and staff and by way of conduct of entrance examination against consideration in the form of entrance fee are exempt from GST.
herein20.
Regarding, input services, it may be noted that where output services are exempted, the educational institutions may not be able to avail credit of tax paid on the input side. The auxiliary education services
[services which educational institutions ordinarily carry out themselves, but may obtain as outsourced services from any other
person] specified in item (b) of entry 66 only have been exempted [Sub-items
(i) to (v) of item (b) of Entry 66].
However, the said exemption comes with a rider. Auxiliary services of (i) transportation of students, faculty, and staff, (ii) catering including any mid- day meals scheme sponsored by Government and (iii) security or cleaning or housekeeping services are exempt only if such auxiliary education services are provided to educational institutions providing services by way of education up to higher secondary or equivalent, (from pre-school to HSC). Thus, if such auxiliary education services are provided to educational institutions providing degree or higher education or institutions providing approved vocational education course, the same would not be exempt.
Health care services
Services provided by Government
Construction services
Passenger transportation services
Goods transportation services
Banking and financial services
Life insurance business services
Services provided by specified bodies
General insurance business services
Pension schemes
Business facilitator/correspondent
Legal services
Sponsorship of sports events
Performance by an artist
Right to admission to various events
Services by an unincorporated body or a non- profit entity
Other exempt services
