It’s common knowledge that GST or the Goods and Services Tax has replaced multiple indirect taxes for a single, unified tax for different categories of goods and services. There are however some goods exempted from GST and others that incur NIL or zero GST. We take a look at the GST exemption list to understand which items get GST tax exemption, which are the non GST items, and what’s the purpose of having exemption under GST in the country’s taxation system.

What is GST exemption?

Let us first understand GST exemption meaning. GST is charged on the basis of the value of a good/service. Based on the GST structure or GST rate slab, GST is levied on most goods and services with the exemption of specific items. These are goods exempted from GST and is also applicable to some businesses and services.

As such, any goods or services or business that does not incur GST charges or where GST is not applicable, are referred to as having GST exemption.

There are different categories of items in the GST exempt items list, and it changes from time to time, based on government rules. In general, essential goods and services, often get GST tax exemption to ensure that they are accessible and affordable to the general public.

What is exemption from GST tax?

Exemption from GST tax refers to those goods and services on which no tax is applicable and hence levied. These include specific essential daily items and services, required to promote availability, accessibility and affordability. Small businesses with less than ₹40 lakhs in annual turnover also fall under the GST exemption limit and are not mandated to register for GST.

There are also some non GST items and 0 GST items on which there is no GST charged. These are tagged as exempt supply under GST and include:

• Non GST items: These are items (e.g., alcohol for human consumption) that are outside the scope of and hence not included under the GST tax laws
• Zero GST items: These are goods and services that are exported to foreign countries and are hence categorised as zero-rated supplies under GST laws
• NIL GST rated items: Items that fall under GST tax laws, but are taxed at 0% and hence do not incur GST charges (e.g., salt)

Also read: GST calculator – Learn how to calculate GST taxes

What are the 3 different types of GST exemptions?

Under the GST framework, GST tax exemption is applicable to goods, services and businesses under three different types: Absolute, Partial and Conditional.

• Absolute GST exemption: These refer to items that are completely exempted from GST tax without any conditions or limitations. Goods such as fruits and vegetables (essential items) and services of the RBI, levy no GST charges and have absolute GST tax exemption.
• Partial GST exemption: These are items with reduced tax rates rather than overall elimination. Services such as educational services, with concessional GST rates fall under this category. This type of GST exemption enables the government to balance services/goods affordability with revenue generation needs.
• Conditional GST exemption: Here exemption from GST is granted under specific circumstances. For instance, to facilitate international trade, services exported are conditionally taxed. This type comes with specific GST exemption limit and restrictions based on the nature and extent of the concession being extended.
• GST exemption for Person with Disabilities (PwDs): The Indian government offers a GST concession under a scheme to benefit individuals with orthopedic disabilities of 40% or more. This scheme allows eligible PwDs to purchase cars at a concessional GST rate.

List of items under GST exemption

In the previous sections, we have discussed the exemption of GST – its meaning and types. Here, let us take a look at the list of GST exemptions for goods and services.

GST exemption list for goods:

The GST exemption list of goods includes a diverse range of types and categories to support economic and social policies. Some of the items included in the GST exemption list are:

• Food staples: Food items that ensure basic nutritional needs and are hence made affordable, e.g., rice, wheat, cereals and other food grains
• Fresh produce: Items such as fruits and vegetables that are untaxed to encourage healthy and nutritional dietary habits
• Natural products: Items that are produced naturally, (e.g., fresh milk, natural honey,) are also GST free
• Livestock: GST exemption also extends to live animals required for agricultural and rural economies, e.g., cattle, sheep, goat etc.
• Books and printed material: All printed books and learning material (e.g., maps, braille books, newspaper) are GST free to promote education and knowledge
• Handicrafts: To support local economies and preserve cultural heritage, all traditional handicrafts made by artisans are exempt under GST
• Drugs and pharmaceuticals: Specific pharmaceutical and medicinal items (e.g., contraceptives) that promote better family planning are also not taxed under GST
• Indigenous goods: Selective goods that support indigenous skills and rural economies (e.g., earthen pots, clay lamps, handmade musical instruments) get GST tax exemption

Also read: GSTR-1 – Know its contents and why it’s important for businesses

GST exemption list for Services:

We now take a look at the list of GST exemptions for Services. This makes critical services more accessible and support society at large.

• Healthcare: Services offered by doctors, nurses and veterinarians, and those of ambulances, hospitals and clinics are exempted from GST taxes
• Education: To foster learning and education, services provided by educational institutions up to higher secondary or equivalent are exempted from GST
• Judicial services: Legal services offered by arbitral tribunal or firm (advocates/senior advocates), to individuals and businesses with less than ₹40 lakhs annual turnover
• Government services: Services offered by the RBI, postal services, etc. are exempt of GST taxes
• Cultural events: Services and events for promoting classical music concerts, dramas and other events of cultural heritage are free from GST
• Charitable activities: Registered charities that meet specific requirements and offer charitable services for society, do not have to pay GST charges
• Religious pilgrimages: Operators organising religious pilgrimages (facilitated by GOI) can avail GST exemption in India
• Public transport: The GST exemption list for Services also includes urban public transport services that fall under the non-AC segment
• Hospitality and hotel accommodation: To promote tourism, hotels, inns, guest houses with tariff under a specific limit per day (i.e., ₹1000 per day), do not have to pay GST

Also read: GSTR-3B – Know due dates and returns filing process

What are exempt GST examples?

Understanding GST exemption can enable you to simplify tax obligations for your business. We’ve already had a look at the list of goods exempted from GST. Couple of other items that fall under the category of exempt GST examples are:

• Cashew, walnuts, and other dry fruits
• Flower seeds and oil seeds
• Mineral water, tender coconut water (unpackaged)
• Flowers, foliage, bulbs
• Bangles, bindi, kajal
• Bread and puffed rice (non-branded)

What is the GST exemption limit?

When it comes to GST registration for businesses, there’s a minimum GST registration threshold or GST exemption limit. That is, all businesses with less than ₹40 lakhs in annual turnover for goods and ₹20 lakhs in annual turnover for services are exempted from GST registration. GST registration is a must to stay compliant and avoid fines and penalty.

As such, the GST exemption limit for businesses stands at ₹40 lakhs for goods and ₹20 lakhs for services in annual turnover. For special category states, the GST exemption limit is reduced to ₹20 lakhs for goods and ₹10 lakhs for services in annual turnover.

Why exemption under GST in India is important?

So why is GST exemption in India important? Here are five reasons why the need to exempt certain items from the purview of GST taxes exists:

• Support basic requirements: GST exemption on essential items such as food grains, medical and educational services ensure that basic requirements are met and are accessible to all
• Promotes learning and cultural development: By exempting GST on learning/educational material and cultural events/promotions, it supports societal development
• Stimulates specific sectors: By exempting sections like agriculture, handicraft etc. from GST, the government supports the growth of these sectors and rural economies
• Fosters MSME growth: The GST exemption limit encourages entrepreneurship as it reduces tax burdens and compliance complexities in the initial years

*This article is for informational purposes only. All are requested to consult with a GST practitioner/CA or relevant for professional advice. visit https://gst.gov.in

Author: Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.