Exempt Goods and Services
Some goods and services are exempt from GST in order to keep some goods and services cheaper for lower-income group In this case no GST is charged on your supplies of goods and services and input tax credits (ITCs) is claimed.
There are two types of GST exclusions: tax-free and tax-exempt:
“Tax-exempt” exclusions consist of goods and services that are charged with GST at the production and distribution stages but not at the final retail stage. Manufacturers, wholesalers, and retailers can’t claim an Input Tax Credit. As such, some GST is embedded in the final price of the good or service; however, it is lower than it would otherwise be under the regular GST regime. Examples of tax-exempt exclusions include residential rents, health and dental care, and educational services.
“Tax-free” exclusions cover goods and services that are not with GST throughout the life of the product. Final consumers are not charged GST while purchasing these products from distributors. Moreover vendors get Input Tax Credits at the production and distribution stages. As a result, the good or service becomes completely free from taxation relating to the GST. Examples of tax-free exclusions include basic groceries, prescription drugs, and medical devices. |
Examples of exempt goods and services include:
- ♦ Goods transported by rail.
- ♦ Supply of transport vehicles (goods carriage) to a goods transport agency (GTA) to be used for transport of goods by road.
- ♦ Transport of essential goods such as foodgrains, fertilisers and petroleum products.
- ♦ Edible oilseeds and edible oil, foodgrains (cereals and pulses) and flour, petroleum and petroleum products and defence and military equipment.
- ♦ Transport of parcels containing newspapers (registered with the Registrar of Newspapers).
- ♦ Raw jute and jute textile, seeds for food crops and fruits and vegetables, seeds for cattle feed, jute seeds, medicine/ pharmaceutical products and relief materials meant for victims of natural or other disasters.
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Goods and Services Tax
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