On the recommendations of the 37th GST Council Meet, Goa, certain services have been added to the GST Exemption List
What is Exempt Supply under GST?
Under GST, certain goods and services, as decided by the government, are exempt from goods and service tax on their supply i.e. ‘NIL’ GST rate is applicable to such transaction. Section 2(47) of the CGST Act 2017 defines an exempt supply of goods and/or services as a supply that either
- Attracts Nil/ 0% rate of GST, or
- Wholly exempt from tax under section 11 of the CGST Act, or
- Wholly exempt from tax under section 6 of IGST act, or
- Includes non-taxable supply (as defined in section 2(78) of the CGST Act, 2017).
Furthermore, these exempted supplies of goods/services can be classified into 3 categories as follows:
- Absolute Exemption: The exemption of goods and/or service tax without any conditions applicable.
- Conditional Exemptions: The exemption of goods and/or services, however subject to certain conditions.
- Partial Exemption: Intra-State supplies of goods and/or services received from an unregistered person by a registered person is exempted from payment of tax under reverse charge provided the aggregate value of such supplies received by a registered person from all or any of the suppliers does not exceed ` 5000/- in a day.
In order to bring the recommendations on exempted services, as made by the GST council in their 37th GST Council Meeting, into action, the CBIC has released notification No 21/2019 – (CT Rate) dated September 30, 2019 in amendment to Notification No. 12/2017 (CT Rate) dated June 28, 2017 (“Services exemption notification”).
Services Rationalised or Added in the GST Exemption List, as recommended by the GST Council
Rationalised Services in GST Exemption list
- Services provided by the Central Government, State Government, Union territory or local authority to a business entity with an aggregate turnover of up to “such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017)” is exempt. Earlier the turnover was specified as “twenty lakh rupees (ten lakh rupees in case of a special category state) in the preceding financial year” which has now been rationalized.
- Services provided by:–
- an arbitral tribunal,
- a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services,
- a senior advocate by way of legal services,
to inter-alia a business entity with an aggregate turnover of up to “such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017)” is exempt. Earlier the turnover was specified as “twenty lakh rupees (ten lakh rupees in case of a special category state) in the preceding financial year” which has now been rationalised.
New Services added in the GST Exempted list
- S. No. 9AA has been inserted in Services exemption notification to exempt “Services provided by and to FIFA and its subsidiaries directly or indirectly related to any of the events under FIFA U-17 Women’s World Cup 2020 to be hosted in India”.
- Amendment has been brought under S. No. 14 of Services exemption notification to clarify that services by way of residential or lodging purposes, having a value of supply of a unit of accommodation below or up to one thousand rupees per day is exempt.
- Condition to S. No. 19A/ 19B of Services exemption notification has been amended to extend the exemption of services by way of transportation of goods by an aircraft/ vessel from customs station of clearance in India to a place outside India till September 2020. Earlier it was exempted only up to September 2019.
- S. No. 24B has been inserted in Services exemption notification to exempt “services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea”.
- S. No. 29B has been inserted in Services exemption notification to exempt “services of life insurance provided or agreed to be provided by the Central Armed Police Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the Group Insurance Schemes of the concerned Central Armed Police Force”.
- S. No. 35 of Services exemption notification has been amended to exempt services of general insurance business provided under “Bangla Shasya Bima” scheme.
- S. No. 82A has been inserted in Services exemption notification to exempt “Services by way of right to admission to the events organized under FIFA U-17 Women’s World Cup 2020”.
Point to be Noted
- The Notification has been brought into effect from October 01, 2019.
- Similar Notifications have been issued for UTGST and IGST Law.
- In addition, “Services provided by an intermediary when the location of both supplier and recipient of goods is outside the taxable territory”, subject to certain conditions, have been exempted by way of additional amendment in IGST notification.
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