GST Exemptions Withdrawn on various consumable items and services

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The GST Council has suggested numerous significant modifications and reforms to GST rates for the supply of goods and services in addition to GST laws and procedures. The guidelines on GST rates will take effect from July 18, 2022 as well as those that relate to GST procedure and law will be in effect from January 1 2023. There is also significant change to GST Rates on items as GST Exemptions are withdrawn on various consumable items and services.

What is the GST Exemption?

Exempt supplies are those that are outside the scope of the GST (goods and services tax). There is no GST applied to these supplies. These supplies will not be eligible for the input tax credit that was paid on them. The following three kinds of supplies are regarded as exempt supplies:

  • Supplies that are subject to tax at zero percent.
  • Supplies that are completely and partially exempt from paying GST according to notifications that revised sections 6 and 11 of the IGST and the CGST.
  • Supplies covered by Section 2(78) of the Act. This includes items like alcoholic liquor for human consumption that are not taxed under the Act.

Two types of GST Exemption

  • Absolute exemption: Under this sort of exemption, the delivery of a certain category of commodities and services would be exempt from GST regardless of the supplier or receiver’s information or whether the product or service is furnished inside or outside the State.
  • Conditional exemption: Under this form of exemption, the supply of a certain category of products/services would be exempt from GST subject to the fulfillment of certain requirements laid out in the GST Act or in any amendments or notifications.

Important Note: GST is exempted from most services provided by and to the government. You can learn about it at: Gst Exempt On Service Provided To Government Organisations 

GST Council Meeting notifies withdrawal of Exemptions on consumable items and services

As per the 47th GST Council Meeting, Curds, lassi, packaged curd, buttermilk, cereals, foodgrains such as honey, papad, and many other non-branded food items , in addition to hotel rooms that have a price less than Rs. 1,000 per night, and rooms for hospitals that have an average daily rate of more than Rs5,000 will soon be taxed under GST.

GST was exempted from certain food items, grains , etc. in cases where the brand is not present, or where brand registration rights have been lost. It has been suggested to amend the exempted areas to exclude pre-packaged and pre-labelled retail packs in accordance with the Legal Metrology Act, including pre-packaged, pre-labelled curds, buttermilk and lassi.

List of GST Exemptions Withdrawn on various consumable items and services

S. No. Description of goods From To
GST rate changes
1. Cheques, lose or in book form Nil 18%
2. Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed Nil 12%
3. Parts of goods of heading 8801 Nil 18%

The exemption in the form of a reduced rate of GST is being rationalized for the following items.

S. No. Description of goods From To
GST rate changes
1. Petroleum/ Coal bed methane 5% 12%
2. Scientific and technical instruments supplied to public funded research institutes 5% Applicable rate
3. E-waste 5% 18%

The following exemptions are also being rationalized for Services:

S. No. Description
1. Exemption on transport of passengers by air to and from NE states & Bagdogra is being restricted to economy class
2 Exemption on following services is being withdrawn.

(a)  Transportation by rail or a vessel of railway equipment and material.

(b)  Storage or warehousing of commodities which attract tax (nuts, spices, copra, jaggery, cotton etc.)

(c)  Fumigation in a warehouse of agricultural produce.

(d)  Services by RBI,IRDA,SEBI,FSSAI,

(e)  GSTN.

(f)  Renting of residential dwelling to business entities (registered persons).

(g)  Services provided by the cord blood banks by way of preservation of stem cells

3. Like CETPs, common bio-medical waste treatment facilities for treatment or disposal of biomedical waste shall be taxed at 12% so as to allow them ITC
4. Hotel accommodation priced up to Rs. 1000/day shall be taxed at 12%
5. Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital shall be taxed to the extent of the amount charged for the room at 5% without ITC.
6. Tax exemption on training or coaching in recreational activities relating to arts or culture, or sports is being restricted to such services when supplied by an individual.

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