CA > Inter > Paper 3 – Skim Notes

Chapter 5: Exemptions from GST

Overview

  • Understanding the power of Government to grant exemptions from CGST/IGST.
  • Overview of goods and services exempt from GST.
  • Identification and analysis of various services exempt from GST.

Key Topics

Introduction to Exemptions from GST

  • Supplies of goods/services that attract GST should be checked against exemptions.
  • Exempt supply defined as items attracting nil tax rate or completely exempt from tax, including non-taxable supplies (Section 2(47)).
  • Non-taxable supply means it’s not leviable under CGST or IGST Act (Section 2(78)).
  • Exemptions are significant for every supplier in determining tax liabilities.
  • Examples include alcoholic beverages and specific petroleum products (e.g., petrol, diesel, etc.).

Deep Dive

  • Exempt supplies can lead to cost and price advantages for essential goods/services.
  • Understanding the implications of exemptions is crucial for compliance and legal accounting practices.

Goods Exempt from Tax

  • A range of everyday goods are exempted, such as unpacked food grains, milk, fruits, etc.
  • Notable exemptions stipulated include live fish, potatoes, and the Indian national flag.
  • Common household products are prioritized to alleviate cost burdens on consumers.

Deep Dive

  • The exempt list reflects governmental priorities in taxation and welfare policies for low-income groups.
  • Monitoring the exempt goods list is crucial for businesses to identify compliance and advantage opportunities.

List of Services Exempt from Tax

  • Various services, such as healthcare, education, and agricultural services, have been exempted from GST.
  • Healthcare services rendered by clinical establishments or practitioners are exempted as per Entry 74.
  • Services provided by educational institutions and related bodies are exempt under specified conditions.

Deep Dive

  • Understanding specific conditions around exemptions is vital for healthcare providers and educational institutions managing compliance.
  • The exemption policy affects policy-making in healthcare and education heavily, ensuring affordability.

Particular Conditions & Exceptions

  • Exemptions come with associated conditions, such as income limits for organizations or caps on service costs.
  • Certain services are specifically exempted when rendered by registered charitable trusts or organizations under Section 12AA.

Deep Dive

  • Organizations must document their exemption claims to maintain compliance with tax regulations.
  • Misunderstanding these exemptions can lead to potential tax liabilities, requiring robust accounting practices.

Analysis of Specific Exempt Tiers

  • Services provided under agricultural policies receive specific exemptions due to their importance.
  • Transport and logistical services have their classes of exemptions defined based on the type of service and delivery method.

Deep Dive

  • Research on a comprehensive understanding of exempt tiers helps organizations with strategic planning for service pricing and service deliveries.
  • This analysis can also reveal market gaps where further service exemptions could facilitate growth.

Summary

This chapter outlines the framework for exemptions from GST, emphasized through various articles and definitions provided in the CGST Act, 2017. Key areas include the power of the Government to grant exemptions, detailed lists of exempt goods and services, and the conditions associated with such exemptions. The emphasis on exempt supplies focuses on fostering public welfare, promoting essential services, and easing burdens for consumers. This intricate understanding is crucial for students and professionals in the financial sector to navigate compliance, advantages, and implications effectively.