Exempt Supply means goods and services sold by the companies are free from Goods and Services Tax (GST). Since GST is a tax for common man, everyday items used by the common man have been included in the list of exempted items. No GST will be charged on these goods & services for company and business, GST paid on the assets, purchases or expenses for their businesses. Supplies are taxable but do not attract GST and for which ITC cannot be claimed in case of Exempt Supplies.

Examples: Live Fish, Fresh Milk & fruits, unpacked food grains, fresh vegetables, Curd, Bread etc.

Following points are to be noted for exempted supply:

  • There is no GST applicable on outward exempted supplies;
  • Input tax credit of inputs and / or input services used in providing exempted supply is not available i.e. no input tax credit on exempted supplies;
  • A registered person supplying exempted goods or services or both shall issue ‘bill of supply’ instead of tax invoice.
ParticularsNIL Rated SuppliesNon-Taxable SuppliesExempt SuppliesZero-Rated Supplies
MeaningGoods and services on which 0% GST is applicableGoods and services on which GST is not levied at allSupplies which are exempt from payment of GSTGoods or services which are exported or supplied to SEZ
Input credit availabilityNot available Not availableNot availableAvailable
GST applicabilityFalls within GST ambitDoesn’t fall within GST ambitFalls within GST ambitFalls within GST ambit
ExampleHotel accommodation with tariff below Rs. 1,000Supply of alcohol for human consumptionInward supplies from unregistered dealersExport of shoes to South Africa

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