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Goods and Services Tax (GST) is a unified indirect tax system in India that applies to the supply of most goods and services. However, certain items are exempt from GST to make essential goods and services more affordable. These are known as GST exemptions. Understanding these exemptions is important for businesses, small traders, and service providers. It helps them avoid unnecessary tax liabilities and plan better. Knowing which goods and services are exempt under GST in India also ensures smooth compliance. In this blog, you will learn about the GST exemptions in India.
GST exemptions apply to certain goods, services, suppliers, or transactions that the Central or State Government has excluded from taxation. These exemptions are designed to reduce the financial burden on essential sectors, support social welfare, and make basic needs more affordable. They help protect vulnerable groups and ensure that vital services, such as healthcare and education, remain accessible to all.
Below are the types of GST exemptions in India:
The government allows certain suppliers to operate without charging GST, regardless of the goods or services they offer. This exemption supports entities that serve the public interest or carry out non-commercial activities. These include charitable institutions, religious trusts, and government-supported welfare agencies. These suppliers do not collect GST even if their services are not otherwise exempt.
Example: A registered charitable trust that offers vocational training does not pay GST on its services.
Some goods and services are exempt from GST due to their essential nature. The exemption applies only to the product or service itself, not to the identity of the supplier. This helps reduce the cost of basic needs and ensures affordability for the general public. Essential items like fresh fruits, vegetables, healthcare services, and school education fall under this category.
Example: A private hospital that offers general medical services does not charge GST on patient treatment.
This exemption removes GST from specific supplies without placing any conditions or restrictions. It applies to all suppliers and consumers involved in the transaction. The government uses this method for services that are critical to everyday functioning or public welfare. There is no requirement to meet any limits or follow any specific rules for this exemption.
Example: Electricity distribution services from a state power company remain fully exempt from GST.
This exemption depends on meeting specific criteria. The government grants it only when the supply satisfies certain limits, purposes, or values. This type helps reduce the tax burden in specific cases without affecting the broader tax structure. It may include limits on service charges, business turnover, or daily supply value.
Example: A hospital does not pay GST on room charges if the per-day cost stays within Rs. 5,000. Another example is when an unregistered supplier delivers goods within a value of Rs. 5,000 per day within the same state; such supplies stay exempt under reverse charge provisions.
The Central or State Government decides which goods or services get GST exemptions. These exemptions aim to serve the public interest and support key sectors. The government announces them through official notifications after receiving recommendations from the GST Council. Exemptions may be absolute, meaning they apply to all cases, or conditional, which means they apply only when specific requirements are fulfilled.
Here is the list of entities that are eligible for GST exemptions:
Individuals engaged in natural crop cultivation do not need to pay GST on sales of farm produce. Even if the buyer does not register under GST, the sale remains tax-free. Farmers are not required to obtain GST registration or file returns for such income, ensuring rural economic support.
A registered person does not have to pay GST under the Reverse Charge Mechanism (RCM) just because they buy from an unregistered supplier. RCM applies only if the purchase falls under the notified categories in Section 9(4). The earlier Rs. 5,000 daily exemption is no longer valid.
Organisations involved in religious or welfare activities enjoy exemptions for services like serving food to the poor, organising events, or providing shelter. These exemptions apply when the institution follows CBIC notification conditions and stays within turnover limits. This must be registered under Section 12AA of the Income Tax Act.
Training centres linked with the National Skill Development Corporation (NSDC) are exempt from GST. This applies when the training follows government-approved skill development programs aimed at job creation.
Suppliers operating in SEZs are exempt from e-invoicing rules, regardless of turnover. However, they must still comply with regular GST return filing and payments. This eases compliance burdens for SEZ units.
Below is the list of GST Exemptions in India:
The following list of the most common goods that are GST exempt –
Category | Examples of GST-Exempt Products |
---|---|
Animal-Based Products | Live animals like cows, goats, sheep, poultry; fresh or frozen meat from goats, pigs, horses, etc. |
Fish & Seafood | Freshwater and marine fish, both fresh and frozen |
Natural & Farm Produce | Natural honey, milk (fresh and pasteurised), cheese, eggs |
Plants and Vegetables | Live plants, flower buds, fresh vegetables (tomatoes, potatoes, onions, carrots) |
Fruits and Dry Fruits | Fresh fruits (bananas, apples, grapes, oranges), nuts like almonds, cashews, walnuts |
Grains and Pulses | Unprocessed wheat, rice, oats, barley, and husked pulses |
Flour and Milled Items | Wheat flour, rice flour, gram flour, and other cereal-based flours |
Seeds and Husks | Oil seeds, flower seeds, and grain husks |
Spices and Beverages | Tea leaves, coffee beans, turmeric, ginger, black pepper, tender coconut water, and unflavored mineral water |
Bakery and Sweet Products | Puffed rice, jaggery, sugar, bread, and unflavored pizza base |
Energy and Fertilisers | Electrical energy (from fossil fuels), bio-manure |
Healthcare Supplies | Human blood, organ donation, vaccines, and contraceptives |
Cosmetics & Personal Care | Bindi, kajal, sindoor, and herbal skincare products |
Waste & Recycling | Sewage waste, recyclable municipal waste, industrial sludge |
Traditional Accessories | Glass bangles, plastic bangles |
Printed and Official Items | Newspapers, printed books, maps, Indian currency notes, judicial stamps, and postal envelopes |
Textiles and Fabrics | Raw silk, khadi, cotton, wool, synthetic fabrics, silkworm cocoons |
Handmade Tools & Pottery | Manual tools like spades, hammers, earthen pots, and clay diyas |
b) List of GST Exemptions on Services
Below is the list of GST exemptions on Services:
Type of Service | Examples of GST-Exempt Services |
---|---|
Agricultural Services | Crop cultivation, hiring farm labour, harvesting, warehousing, rental of farm equipment, services of APMC/commission agents for trading farm produce |
Government Services | Postal services, public transport, services by foreign diplomats or embassies, services by the RBI to the government or public |
Transport Services | Transport of goods via road or inland waterways, passenger air travel in economy class, toll charges, and goods transport costing less than Rs. 1,500 |
Judicial Services | Legal services from arbitral tribunals or law firms to individuals or small businesses with a turnover under Rs. 40 lakhs |
Educational Services | School transport for students and staff, mid-day meal schemes, exam-related services, training by IIMs under approved programs |
Medical Services | Services from ambulances, charitable hospitals, licensed medical professionals, and veterinary doctors (excluding cosmetic or plastic surgery) |
Organizational Services | Business exhibitions held for foreign participants, guided tours arranged for international tourists |
Miscellaneous Services | Services by GST Network (GSTN) to government bodies, entry fees for shows, circuses, or sports events, charging up to Rs. 250 |
The following are the reasons for exemption under GST:
Here are the latest updates on GST exemptions in India:
CBIC issues Circular No. 247/04/2025 GST (April 2025), which confirms that farmers who sell raisins directly after cultivation do not pay GST. They do not need GST registration under Section 23(1) of the CGST Act.
In Circular No. 245/02/2025 GST (January 2025), CBIC reaffirmed the following exemptions:
CBIC issues Circular No. 245/02/2025 GST (January 2025) clarifying that penal charges imposed by banks or NBFCs (under RBI rules) do not attract GST, as such charges aim to enforce contract terms rather than purchase any service.
CBIC clarifies that RBI-regulated payment aggregators receive GST exemption for transaction settlement services up to Rs 2,000 per transaction. It excludes payment gateway functions.
Grant-funded R&D services offered by the government, educational institutes, or universities remain exempt. The CBIC regularises past tax liabilities from 1 July 2017 to 9 October 2024.
Services by NSDC-approved training partners continue to enjoy exemption starting 16 January 2025. The past period (10 Oct 2024 to 15 Jan 2025) gets automatic regularisation.
CBIC issues Circular No. 246/03/2025 GST (30 January 2025) and Notification 06/2025-CTR clarifying that support services—meter rental, shifting, testing, billing, connection—do not attract GST from 10 October 2024 to 15 January 2025.
Conclusion
GST exemptions help ease tax burdens for essential sectors, small businesses, and charitable services. They also support agriculture, promote exports, and ensure basic goods and services remain affordable. Staying informed about these exemptions is important for every taxpayer to ensure compliance and avoid unnecessary costs. As GST rules evolve, regular updates help businesses and individuals make better financial decisions and take advantage of available tax reliefs. For instance, if you want to do a GST registration, contact Online Legal India to get expert assistance.