What Is GST Exemption and Which Goods and Services Are Exempt?

Have you ever compared two invoices and wondered, "Why is GST here, but not there?" Or maybe you heard that your neighbour's home bakery does not charge GST and you thought, "Am I missing something?" Don’t worry, you are not alone. GST Exemption in India can be confusing initially, but when we break it into little pieces, it starts making sense.

In this guide, you will walk through what GST exemption really is, what goes into the GST exemption list, which are the common GST-exempted goods and services and how the GST exemption limit works for small businesses.

What is the GST Exemption?

GST exemption simply means that no GST is charged on any particular supply. If something is listed under GST-exempted goods, the seller doesn't charge GST to the customer.

But here's the thing that most people don't pay attention to:

Even though GST isn't charged, the supplier cannot claim Input Tax Credit (ITC) for taxes paid on purchases used to supply these goods/services.

Does that make sense?

Types of GST Exemptions

You'll find four major types in the gst exemption list:

Absolute Exemptions

These are unconditional. No GST, no conditions.

Example: The unbranded foodgrains.

Conditional Exemptions

You get an exemption only if you satisfy certain criteria.

Example: Room charges up to ₹1000 are exempted from GST. 

Partial Exemptions

Some percentage is exempt; the remaining amount is taxable.

This applies to mixed supplies or some government services.

Location-Based/Person-Based Exemptions

Sometimes, an exemption is based on who provides the service or where the service is provided.

Example: Services provided by an educational institution to students.

List of Goods Exempted from GST

The following is the list of goods that are exempt from GST: 

1. Livestock & Marine Goods

• Domestic animals: Poultry birds, goats, cattle, sheep, and asses. 

• Edible meat varieties: Frozen or fresh cuts from pigs, goats, sheep, horses, and cattle. 

• Aquatic produce: Chilled or frozen fish of various types.

2. Agricultural & Natural Produce

• Daily-use natural foods: Cheese, eggs, honey, and both fresh and pasteurised milk. 

• Plant-based items: Flower bulbs, decorative leaves, live plants, roots. 

• Vegetables: Carrots, onions, potatoes, and tomatoes. 

• Fruits: Apples, oranges, grapes, bananas. 

• Dry nuts: Walnuts, cashews, almonds. 

• Cereals & grains: Oats, barley, rice, and wheat. 

• Milling derivatives: Different flour types. 

• Seeds & husk items: Oil seeds, flower seeds, cereal husks. 

3. Spices, Beverages & Packaged Liquids

• Tea, coffee & spices: Ginger, turmeric, coffee beans, black pepper, tea leaves

• Water-based products: Packaged drinking water, natural mineral water, tender coconut water

4. Bakery & Processed Foods

• Sugar-based goods: Jaggery, refined sugar

• Baked items: Pastries, bread, pizza bases, puffed rice.

5. Industrial & Energy-Sector Goods

• Power & fuels: Electrical energy and similar fossil-fuel-based items

• Farming essentials: Organic manure and various kinds of fertilisers

6. Healthcare & Personal Use Items

• Medicinal essentials: Vaccines, contraceptives, human blood, and other pharmaceutical items

• Beauty accessories: Herbal cosmetic products, kumkum, kajal, and bindi

7. Waste Management & Recyclables

• Disposal items: Municipal garbage, recyclable materials, and sewage sludge

8. Accessories, Currency & Printed Articles

• Jewellery alternatives: Bangles made of glass or plastic

• Official printed matter: Rupee notes, postal envelopes, judicial stamp papers

• Reading/printed products: Newspapers, maps, printed books

9. Textiles, Tools & Handcrafted Goods

• Fabric materials: Raw silk, cotton, wool, synthetic fabrics, khadi, silkworm cocoons

• Basic tools: Gardening kits, hammers, spades

• Earthenware: Clay diyas, ceramic pots, and other pottery pieces

List of Services Exempted from GST

The following are the services that are exempted from GST: 

1. Agriculture-Linked Services 

• Farming operations: cultivation, harvesting, crop-related tasks
• Agricultural labour supply
• Cleaning, fumigation, grading, and packing of produce
• Renting/leasing of farm tools and agri-machinery
• Agri-warehouse handling and storage
• Services by APMCs / Agriculture Marketing Boards

2. Transport Categories

• Toll-paid road/bridge usage
• Goods transport by road (excluding courier & express companies)
• Transport of goods by inland waterways
• Passenger air travel: Northeastern region + Bagdogra
• Non-AC horse carriage / non-AC contract carriage
• Transport of agricultural produce, food grains, milk, newspaper bundles, and salt
• Freight charges ≤ ₹1500 per shipment
• Vehicle hire for State Transport Undertakings (capacity above 12 passengers)

3. Government & Diplomatic Exemptions

• Foreign diplomatic mission services
• RBI-related services

Not Covered:

• Speed post / express post/parcel post
• Aircraft or vessel–related operational services
• Passenger or goods transportation services

4. Legal & Judicial Exemption List

• Arbitral tribunal services for non-business recipients
• Legal services by partnership law firms to non-business or small entities
• Senior advocate services to non-business or small entities

5. Education-Related Exemptions

• Student commute services
• Mid-day meal supply
• Security and housekeeping for educational institutions
• Admission and exam-related services
• IIM programmes (except Executive Development Programmes)
• Coaching under the government disability scholarship scheme

6. Medical & Health Support Exemptions

• Veterinary treatment
• Clinical and paramedical services
• Ambulance operations
• Charitable medical activities
• Pilgrimage support services

7. Event & Tourism Exemptions

• International exhibition services are provided to exhibitors
• Foreign-tour services are carried out completely outside India

8. Other General Exemptions

• Electricity transmission and distribution
• Recognised sports associations’ services
• Press agencies and journalist services (e.g., PTI)
• Library and reading room services
• Public convenience services (toilets, urinals, washrooms)
• Vehicle renting by State Transport Undertakings
• Overload fee collection at toll plazas

9. Newly Introduced Exemption List

• GSTN services to governments and Union Territories
• Back-office operations exemptions
• Residential property rental; hotel stays under ₹1000/day
• IGST exemption on leased goods transferred to a new lessee within India
• Air/sea export exemption extended till 30 September 2022
• Entry charges ≤ ₹250 for parks, sanctuaries, museums, and entertainment venues

Difference Between Exempt, Nil-Rated, Zero-Rated, and Non-GST Supplies

This is where many business owners get confused. Here’s the clear difference between nil-rated, zero-rated and non-GST supplies: 

A simple way to remember:

• Zero-rated = best for businesses because ITC is allowed.
• Exempt/Nil-rated = no ITC.
• Non-GST = GST not applicable at all.

GST Exemption from Registration

Now here's something that affects lakhs of small businesses directly.

You do not need GST registration if your annual turnover is less than the limit of GST exemption which is:

• ₹40 lakh for goods

• ₹20 lakh for services

• ₹10 lakh to special category states

But there's a catch:

Even with low turnover, some businesses must register such as interstate suppliers, e-comm sellers, and those under reverse charge. 

So the exemption isn't so simple as 'turnover below limit = no GST'.

Always check your category.

GST Exemption for a Business

Businesses can get exemptions in cases such as:

Reverse Charge on Unregistered Supplier Cancelled

Earlier if you made any purchase of goods/services from unregistered dealers then you had to pay GST under reverse charge. This provision was relaxed, which helped benefit the small traders.

Exemption granted to Composition Dealers

If you choose the composition scheme, you pay a small percentage of the turnover, rather than GST on every single sale. But you cannot collect GST, and you cannot also claim ITC.

Industry-Specific Exemptions

Some sectors are exempted on the basis of the sectors:

• Handicrafts

• Agriculture

• Small-scale artisans

These exemptions have the effect of reducing compliance load.

What Are the Reasons for Exemption In GST?

GST exemptions are granted for mainly:

• To decrease pressure on essential goods

• Support small businesses

• Encourage certain industries

• Sustain the affordability of healthcare and education

• To make sure no one in the lowest strata of the society gets hurt. 

In some cases, exemptions are temporary in situations such as natural disasters or pandemic. 

Final Notes 

GST exemptions are simple on the surface, deep down there are many layers attached to it. Whether you are a retailer who sells daily essentials or a service provider who deals with educational or healthcare services, knowing the gst exemption list, exempted goods under GST, and gst exemption limit helps you stay compliant and confident.

If you still have any doubt about what items or services come under exemption, or if you are finding mistakes in accounting, invoicing or return filling regularly; consider it as a sign to implement all-in-one Munim Accounting, Billing & GST Return software. It makes it easy to file GST returns and avoid the penalties and make compliance stress-free.

Frequently Asked Questions

Which goods are exempted from GST?

Essential items such as fresh fruits and vegetables, unbranded flour, milk, eggs, seeds, human blood, and certain handicraft items are exempt from GST. 

Is electricity exempt from GST?

Yes, electricity is exempted from GST. It falls under the “Non-GST supply” category and is taxed only by state governments.

Are books exempt from GST?

Printed books, including textbooks and newspapers, are exempt from GST.

Is alcohol exempted from GST?

Alcohol to be taxed by state excise laws, so it’s considered a Non-GST item rather than a GST-exempt one.

Is GST exempted for educational institutions​?

Yes, tuition fees and other services provided by educational institutions are exempted from GST. 

Is GST registration required for exempted goods​?

If you deal only in GST exempted goods, registration is not required. 

Is newspaper exempt from GST?

Yes. Newspapers and their printing charges are exempt from GST.

Is petrol exempted from GST?

Petrol is taxed under VAT and excise, making them “Non-GST supplies,” not GST-exempt items.

About the author

Mehul Jagwani

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Mehul is a seasoned content writer with a passion for simplifying complex accounting and GST topics. With a keen interest in entrepreneurship and business management, he specializes in creating informative and engaging content for themunim.com. His goal is to help businesses understand and implement accounting and GST software solutions effectively. When he's not crafting content, Mehul enjoys exploring new places and spending time with his Golden Retriever.